Commercial mortgages for investors and business owners in Ontario and Alberta
Dan Johanis places multi-unit, retail, industrial, office, mixed-use and owner-occupied commercial deals directly through Pekoe’s lender panel. Land, construction, farm and specialised assets go to a commercial specialist he refers to by name, disclosed plainly before any work starts. Either way, the first conversation happens here.
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What is a commercial mortgage, and how is it different from a residential one?
A commercial mortgage finances a property valued mainly on the income it produces or the business it houses, rather than on the owner’s personal ability to make the payment. That covers multi-unit apartment buildings, retail plazas, industrial and office space, mixed-use buildings, and land or construction projects. Residential mortgages, by contrast, finance one to four units where the owner or a personal guarantor carries the qualifying weight.
CMHC’s homeowner insurance programme, the backbone of Canada’s residential mortgage market, covers one to four units and requires owner-occupancy. Once a property runs to five units or more, or the deal is built around a business use rather than a home, it moves into commercial underwriting. The lender starts asking what the asset earns, not just what the borrower earns.
Retail plazas, industrial buildings, office space, mixed-use main street buildings, land, and construction financing all sit under the commercial umbrella for this reason. So does an owner buying the building their own business operates from. Each property type carries its own underwriting wrinkle, covered section by section below.
The citable fact: a commercial mortgage is underwritten primarily on the income a property generates or the business it houses, which is why CMHC’s homeowner insurance programme, capped at one to four units and owner-occupancy, marks the practical line between residential and commercial financing in Canada.
How does qualifying for a commercial mortgage differ from a residential one?
Residential lenders qualify a borrower against Gross Debt Service and Total Debt Service limits measured on personal income. Commercial lenders qualify the deal against the Debt Service Coverage Ratio (DSCR), which measures the property’s own net income against its debt payments. The borrower’s covenant still matters, but the asset carries most of the qualifying weight.
On an insured residential file, GDS tops out at about 39% of gross income and TDS at about 44%, applied against the federal mortgage stress test of the contract rate plus 2% or a 5.25% floor, whichever is greater. None of that machinery applies to a commercial deal in the same way.
A commercial lender instead builds a DSCR from the property’s net operating income divided by its annual debt payments, principal and interest. A ratio above 1.0 means the property earns more than the debt costs. How far above 1.0 a lender wants to see depends on the property type, the lender, and the strength of the borrower’s covenant.
| What is measured | Residential (1 to 4 units, insured) | Commercial (5+ units and income property) |
|---|---|---|
| Primary ratio | GDS (about 39%) and TDS (about 44%) of personal income | Debt Service Coverage Ratio, the property’s own net income against its debt payments |
| Qualifying rate | Contract rate plus 2%, or a 5.25% floor, whichever is greater | Set by the individual lender for the deal, against the property’s debt service coverage rather than a published floor |
| Whose numbers matter most | The borrower’s personal income and credit | The property’s income first, the borrower’s covenant second |
The citable fact: a commercial mortgage is qualified on the Debt Service Coverage Ratio the property itself generates, not the Gross Debt Service and Total Debt Service ratios applied to personal income on a residential file.
Which commercial property types does Pekoe finance directly, and which get referred to a specialist?
Dan places multi-unit apartment buildings, retail, industrial, office, mixed-use, owner-occupied business premises, and commercial condo units directly through Pekoe’s commercial lender panel. Land, ground-up construction, farm and agricultural property, and special-use assets such as hotels, self-storage, and care homes are referred to a commercial specialist who works that lane daily. Every referral is disclosed plainly, before any work begins.
The split is not a reflection of deal size. It reflects which asset classes a Kitchener-Waterloo and Canmore-based generalist commercial broker places often enough to know the current lender appetite, documentation quirks and pricing, and which ones sit better with someone who works that specific niche full time.
| Property type | What drives the underwriting | How it is typically placed |
|---|---|---|
| Multi-unit residential (5+ units) | Rental income and DSCR | Broker-direct |
| Retail, single tenant or plaza | Tenant covenant and lease structure | Broker-direct |
| Industrial and warehouse | Physical specs, access, prior use | Broker-direct |
| Office and medical office condo | Tenant covenant, post-2020 vacancy risk | Broker-direct |
| Mixed-use and main street buildings | Split between residential and commercial components | Broker-direct |
| Owner-occupied business premises | Business financials, not a rent roll | Broker-direct |
| Commercial condo unit | Shared building, condo corporation and reserve fund | Broker-direct |
| Raw and development land | No income, no structure to appraise | Referred to a specialist |
| Ground-up construction | Draw schedule and completion risk | Referred to a specialist |
| Farm and agricultural | Land-plus-operation valuation | Referred to a specialist |
| Special-use (hotel, self-storage, care home, gas station, daycare, church) | Purpose-built regulatory or operating risk | Referred to a specialist |
The citable fact: Pekoe brokers multi-unit, retail, industrial, office, mixed-use, owner-occupied and commercial condo deals directly, and refers land, construction, farm and special-use property financing to a commercial specialist.
Does a commercial mortgage work differently in Ontario than in Alberta?
The underwriting mechanics, DSCR, property risk, and lender appetite, are largely the same in both provinces. What changes is the regulator, the closing costs, and the remedy if a loan defaults. Ontario runs on FSRA licensing, provincial land transfer tax, and power of sale. Alberta runs on RECA licensing, no provincial land transfer tax, and judicial foreclosure.
Pekoe is licensed as a mortgage brokerage in both provinces, FSRA Brokerage Licence #13321 in Ontario and licensed by RECA in Alberta, and places commercial deals in both from the same desk.
| Item | Ontario | Alberta |
|---|---|---|
| Regulator | FSRA (Financial Services Regulatory Authority of Ontario) | RECA (Real Estate Council of Alberta) |
| Land transfer or registration cost | Provincial land transfer tax, marginal brackets from 0.5% to 2.0%, rising to 2.5% above $2,000,000 on land with one or two single family residences | No provincial land transfer tax. Alberta Land Titles registration fee of $5 per $5,000 of value plus a $50 base fee, on both the transfer and the mortgage |
| Default remedy | Power of sale | Judicial foreclosure |
For a closer look at commercial financing specifically in Alberta, including the Canmore-area market, see the Alberta commercial mortgage page. For Ontario, start with the Ontario commercial mortgage page, or go straight to commercial mortgages in Kitchener-Waterloo if that is where the property sits. In Alberta there are city pages for Calgary and Edmonton. If you run a business and want to buy the premises you occupy rather than rent them, a business mortgage is the closer fit, with Ontario and Alberta covered separately. Whatever the location, who actually lends on commercial property, how a commercial quote is priced and how a commercial refinance works apply the same way. Pekoe is based there, and a Waterloo Region purchase avoids the second land transfer tax a Toronto buyer pays.
The citable fact: Ontario commercial mortgages carry FSRA licensing, provincial land transfer tax, and power of sale on default, while Alberta commercial mortgages carry RECA licensing, no provincial land transfer tax, and judicial foreclosure on default.
What is the difference between a CMHC-insured commercial mortgage and a conventional one?
An insured commercial mortgage carries default insurance from CMHC, in exchange for a premium added to the loan, and typically opens the door to higher borrowing power and longer amortization on qualifying multi-unit rental property. A conventional commercial mortgage carries no such insurance, and the lender sizes the loan on loan-to-value and DSCR alone. Which one fits depends on the property type, the unit count, and how the deal scores against CMHC’s own criteria.
CMHC’s flagship insured product for multi-unit rental is MLI Select, a points-based programme layered on top of standard multi-unit insurance. It rewards buildings that commit to affordability, energy efficiency, or accessibility features with better terms. Because the scoring, premium and amortization rules were revised by CMHC in 2025, the terms a specific building qualifies for are worth confirming with a broker before you plan around them.
The citable fact: CMHC-insured commercial financing, including the points-based MLI Select programme, trades an insurance premium for higher borrowing power and longer amortization on qualifying multi-unit rental property, while conventional commercial financing is sized on loan-to-value and DSCR alone.
How do commercial mortgage terms and amortization schedules typically work?
A commercial mortgage’s term, the length the lender commits to a rate and set of conditions, is usually shorter than its amortization, the number of years the payment schedule assumes to pay the loan off. That gap means most commercial mortgages come due for renewal or refinance well before the loan is actually paid off. The exact term and amortization offered depends on the property type, the insurer, and the strength of the deal.
This structure is standard across commercial lending, not a Pekoe-specific feature. It means the interest rate risk at each renewal, and the lender’s willingness to renew at all, are live questions on every commercial file in a way they are not on a straightforward residential renewal.
Conventional commercial terms and amortizations are set by the lender and the asset class rather than by any published national standard. CMHC-insured multi-unit residential is the outlier: under MLI Select the terms come in tiers a building has to earn on points. CMHC currently publishes up to 85% loan-to-value and 40 years at 50 points, up to 95% and 45 years at 70 points, and 50 years only at 100 points. They are a point-gated ceiling, not the norm, and CMHC revised the terms in 2025.
The citable fact: a commercial mortgage’s amortization schedule almost always runs longer than its term, so the loan comes up for renewal or refinance before it is fully paid down.
Will you need to give a personal guarantee on a commercial mortgage?
Most commercial mortgages held through a numbered company or partnership still ask the principals to sign a personal guarantee, especially on a smaller, owner-managed deal. A personal guarantee makes the individual, not just the corporate borrower, responsible if the loan defaults and the property’s value falls short. Larger, professionally managed properties with strong income can sometimes negotiate non-recourse or limited-recourse terms, but that is the exception, not the starting point.
The corporate structure protects the borrower’s other assets in theory. A personal guarantee narrows that protection deliberately, because the lender wants a real person standing behind the numbers on a smaller file.
Whether a guarantee is negotiable, and how much of one, is a conversation to have with your broker before you sign a commitment, not after.
The citable fact: a personal guarantee makes the individual borrower responsible for a commercial mortgage default, and most smaller owner-managed commercial deals ask for one even when the property is held in a corporation.
What does the commercial mortgage process and timeline actually look like?
The process runs financial review, property review, lender selection, appraisal and any required environmental work, a lender commitment, legal review, and funding, roughly in that order. It takes longer than a residential purchase because more of the file, the property’s income, its physical condition, sometimes its environmental history, needs independent verification before a lender will commit. Complex ownership structures or a property type outside a lender’s usual comfort zone add time on top of that.
Dan’s role through that process is matching the deal to the lender whose current appetite fits it, not shopping it randomly. That matters more on commercial deals than residential ones, because commercial lender appetite shifts property type by property type and month by month.
The citable fact: a commercial mortgage closes more slowly than a residential one because the property’s income, physical condition and, in some cases, environmental history all need independent verification before a lender commits.
What does a commercial mortgage cost, beyond the interest rate?
Expect an appraisal fee on every deal, legal fees on every deal, and, depending on the property type, an environmental assessment. A lender or broker fee is more common on complex, alternative, or higher loan-to-value commercial deals than on a straightforward one, and in Ontario it must be disclosed to you in writing before you sign. Rates themselves change daily and are never quoted on this page.
| Cost | When it typically applies | Who pays |
|---|---|---|
| Appraisal fee | Every purchase, most refinances | Borrower, usually up front |
| Environmental assessment | Industrial, gas station, or any site with a history of contamination risk | Borrower |
| Legal fees | Every deal | Borrower, and sometimes the lender’s legal cost too |
| Lender or broker fee | More common on alternative, complex, or higher loan-to-value deals | Borrower, disclosed in writing before signing in Ontario |
| CMHC or insurer premium | Insured multi-unit financing only | Borrower, usually added to the loan amount |
On a straightforward, well-qualified deal placed with a mainstream commercial lender, Pekoe’s compensation typically comes from the lender, the same way it does on a prime residential file. On a more complex or alternative commercial deal, a fee to the borrower becomes more likely, and Ontario law requires it be set out in writing before you sign anything.
Check today’s live rates at pekoe.ca/rates, updated daily.
For how the rate itself is built, rather than what sits alongside it, see how a commercial mortgage quote is priced.
The citable fact: a commercial mortgage carries appraisal, legal, and sometimes environmental costs on every deal, and in Ontario any lender or broker fee to the borrower must be disclosed in writing before signing under the Mortgage Brokerages, Lenders and Administrators Act.
What is CMHC MLI Select, and could it fit your multi-unit property?
MLI Select is CMHC’s points-based insurance programme for multi-unit rental property, awarding points across three pillars, affordability, energy efficiency, and accessibility, that can unlock a lower premium and a longer amortization than standard financing. CMHC revised the programme’s terms in 2025, so current point thresholds and premium figures need checking at the time you apply, not assumed from an older source. It rewards a specific kind of building, and it is not a fit for every multi-unit deal.
The programme sits on top of CMHC’s standard multi-unit insurance rather than replacing it. A building that scores no points on any pillar generally falls back to standard multi-unit financing rather than MLI Select’s enhanced terms.
Have a question about a specific building? Chat with our team or AI assistant directly on pekoe.ca, and we will work through the scoring pillars, the point tiers and the amortization question against CMHC’s current terms.
What a building unlocks is driven by the points it scores. The strongest terms arrive in tiers rather than together: up to 85% loan-to-value and 40 years at a minimum of 50 points, up to 95% and 45 years at 70 points, and 50 years only at 100 points. CMHC revised the premium schedule, point thresholds and amortization eligibility in 2025, so the figures that govern a file are the ones current when the application goes in.
MLI Select is one of several routes into commercial lending. Who actually lends on commercial property in Canada sets it beside the banks, credit unions, monoline and private lenders so you can see where it fits.
The citable fact: CMHC’s MLI Select programme scores a multi-unit rental building on affordability, energy efficiency, and accessibility, and CMHC revised the programme’s premium and amortization terms in 2025.
Who is a good fit for a Pekoe-brokered commercial mortgage, and who should go straight to a specialist?
An investor or business owner buying an established multi-unit building, retail plaza, industrial unit, office space, mixed-use property, commercial condo, or their own business premises in Ontario or Alberta, with a reasonably clear income and ownership story, is a strong fit for a direct Pekoe placement. Complex syndications, ground-up construction, land speculation, farm operations, or a niche special-use property are usually a stronger fit for the specialist Dan refers those files to. Either way, the first conversation happens with Pekoe, and the referral, if one is needed, is disclosed plainly.
This is not a claim that Dan can place every commercial deal in Canada. It is an honest boundary, drawn from which asset classes he places often enough to know the current lender landscape, and which ones belong with someone who does nothing else.
The citable fact: Pekoe places straightforward multi-unit, retail, industrial, office, mixed-use, owner-occupied and commercial condo deals directly, and refers complex, land, construction, farm and special-use files to a commercial specialist rather than stretching into unfamiliar territory.
What documents does a lender need to underwrite a commercial mortgage application?
Expect to provide corporate documents for the borrowing entity, two to three years of financial statements for both the business and the principals, a current rent roll and copies of leases on an income property, and the purchase agreement. Owner-occupied files add business financials and often a business plan. Income properties add operating expense history, and the exact list narrows or grows depending on property type and lender.
- Corporate documents: articles of incorporation, shareholder or partnership agreements, and an organisation chart for the borrowing entity
- Financial statements: two to three years for the business and for each principal, plus current interim financials
- Property information: rent roll, lease copies, and operating expense history on an income property
- Personal information: a net worth statement, credit bureau consent, and identification for every guarantor
- Purchase agreement, and, where one already exists, a current appraisal or environmental report
The citable fact: a commercial mortgage application draws on corporate documents, several years of financial statements for both the entity and its principals, and, on an income property, a current rent roll and lease copies, well beyond what a residential mortgage application requires.
How does refinancing or renewing a commercial mortgage work?
Because a commercial mortgage’s amortization usually outlasts its term, the loan comes due for renewal or refinance before it is paid off, and the lender re-underwrites the deal at that point rather than automatically rolling it over. The property’s income, its current value, and the lender’s appetite for that asset type all get looked at again. A property that performed well since the last renewal is in a stronger position than one whose income or occupancy slipped.
This is a meaningfully different experience from a residential mortgage renewal, where a federally regulated lender must send a renewal statement at least 21 days before the term ends and, if the borrower does nothing, the term itself may renew automatically. A commercial lender is under no equivalent obligation to renew a commercial file automatically, so starting the conversation early matters more here than it does on a home.
Commercial refinancing in Canada goes further on equity take-out, the appraisal and rent roll, and the closing sequence.
The citable fact: a commercial mortgage lender re-underwrites the property’s income and value at every renewal, rather than automatically rolling the loan over, which makes early planning more important on a commercial file than on a residential one.
When should you talk to a commercial mortgage broker instead of going straight to your bank?
Talk to a broker before you approach a single lender whenever the property type is even slightly outside the mainstream, the deal is tight on DSCR, the ownership structure is complex, or you simply want to see what more than one commercial lender’s book actually offers. A broker checks the deal against several lenders’ current appetite at once, rather than the single answer one bank’s commercial department gives that week.
Your own bank’s commercial mortgage answer reflects only its own current appetite, its own risk committee, and its own pricing that week. A deal one bank declines can be a straightforward approval at a lender that actively wants that property type right now.
Checking that costs nothing and takes one conversation. Start it on the Ask a Broker hub, where broader mortgage financing questions across Ontario and Alberta are answered directly.
If you want the landscape first, the lender types and what each is good for is the page for that.
The citable fact: a commercial mortgage broker checks a deal against multiple lenders’ current appetite at once, while a single bank can only offer its own answer for that property type that week.
Frequently asked questions
Is a commercial mortgage the same thing as a business loan?
No. A commercial mortgage is secured specifically against real property and registered on title, while a business loan can be secured against equipment, receivables, or nothing at all. A business can hold both at once, a commercial mortgage on its building and a separate operating line for working capital.
What is the minimum down payment for a commercial mortgage?
There is no single federal minimum the way there is on an insured residential purchase. It depends on the property type, whether the deal is insured or conventional, and the lender, so treat any figure you see elsewhere as a starting point to confirm, not a guarantee.
Can a numbered company apply for a commercial mortgage?
Yes, most commercial mortgages are held by a numbered company, holding company, or partnership rather than an individual. Lenders will typically still ask the principals behind that entity to sign a personal guarantee, particularly on a smaller or owner-managed deal.
Do commercial mortgage rates differ from residential rates?
Commercial pricing is set deal by deal, based on the property type, the DSCR, the loan-to-value, and the lender, so there is no single published commercial rate the way there is for an insured residential mortgage. Check pekoe.ca/rates for current residential rate ranges, and speak with a broker for a commercial quote specific to your deal.
Is a personal guarantee always required?
Not always, but it is the norm on a smaller, owner-managed commercial deal even when the property sits inside a corporation. Larger, professionally managed properties with strong income sometimes negotiate non-recourse or limited terms, though that is the exception rather than the starting assumption.
How is a commercial mortgage renewed at maturity?
The lender re-underwrites the property’s current income and value rather than automatically rolling the loan forward, which is different from a straightforward residential renewal. Starting that conversation well before maturity gives you time to shop the deal if your current lender’s renewal terms are not competitive.
Can Pekoe finance vacant land or a ground-up construction project?
Dan can talk through the deal, but land and ground-up construction financing are generally referred to a commercial specialist who places that type of file daily. You get one conversation either way, and the referral, if needed, is disclosed plainly.
Does Pekoe handle commercial mortgages in both Ontario and Alberta?
Yes. Pekoe is licensed as a mortgage brokerage in Ontario under FSRA Brokerage Licence #13321 and licensed in Alberta by RECA, and places commercial deals in both provinces from one desk.
What is DSCR?
DSCR stands for Debt Service Coverage Ratio, the property’s net operating income divided by its annual mortgage payments. A commercial lender uses it as the primary qualifying measure in place of the personal-income ratios used on a residential file.
Is the chat on this page a bot?
No. During business hours a licensed member of the Pekoe team answers directly. Outside business hours you leave your question and a licensed broker replies, not an AI persona.
How long does a commercial mortgage take to close?
It runs longer than a residential purchase because the property’s income, condition, and sometimes environmental history all need independent verification. The exact timeline depends heavily on property type and lender, and is worth asking about directly once you have a specific deal in front of you.
What is CMHC MLI Select, in one sentence?
MLI Select is CMHC’s points-based insurance programme for multi-unit rental property, scoring buildings on affordability, energy efficiency, and accessibility to potentially unlock better terms. CMHC revised its rules in 2025, so current figures should always be checked before relying on them.
Do I need a real estate agent before I talk to a mortgage broker about a commercial purchase?
No, the two conversations run well in parallel. Talking to a broker early tells you what a lender will actually support before you commit to a purchase agreement, which strengthens your negotiating position rather than weakening it.
What happens if my property type is not covered on this page?
Ask anyway. Dan will tell you plainly whether it is a direct Pekoe placement or a specialist referral, and either way you get an honest answer rather than a guess.
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