Home · Financing · Commercial Real Estate · 2026
How to finance commercial real estate in BC.
Buying a storefront, a shop, an office, a warehouse or a rental building works differently from buying a home, the property's income does much of the qualifying. Here's the plain-English map: how commercial mortgages work, what down payment to expect, the numbers lenders use, and how to get ready.
The short version
- What it covers
- Buying or refinancing commercial property: retail, office, industrial, mixed-use, land, and residential buildings with 5+ units.
- Down payment
- Usually larger than a home, often 20–35% or more, depending on the property and lender.
- What qualifies you
- The property's income and its debt service coverage, not just your salary. Your credit and experience still matter.
- Owner-occupied vs investment
- Using it for your own business can be treated differently from a pure income property.
- Expect
- More due diligence, often a personal guarantee, and terms that vary far more than residential.
The big difference
Why it's not like a home loan.
If you've bought a house, some of this is familiar, but commercial lending has its own rules. Here's what changes.
The property qualifies, as much as you do
Residential lending leans on your personal income. Commercial lending leans heavily on the property's income, will it earn enough to comfortably cover the mortgage? Your credit, net worth and experience still matter, but the deal has to stand on the building's numbers.
Bigger down payment, lower LTV
Expect to put down more, commonly 20–35% or more, so the loan-to-value (LTV) is lower than a typical home purchase. The exact figure depends on property type, condition, tenancy and lender appetite.
More due diligence
Lenders dig deeper: a commercial appraisal, a review of leases and the rent roll, sometimes an environmental assessment (Phase I), and your business financials. It takes longer than a home purchase, plan for it.
Varied terms & a personal guarantee
Amortizations, term lengths and rates vary widely by property and lender, and most lenders want a personal guarantee from the owners. There's less standardization than residential, which is exactly why shopping the deal matters.
What you're buying
The main types, at a glance.
Different property types carry different risk, down payments and lender appetite. The big categories:
Owner-occupied
You buy premises for your own business, a shop, studio, clinic or warehouse. Because your business is the tenant, this can be treated more favourably than a pure investment.
Best for: owners tired of paying rent.
Investment / income
Retail, office or industrial you buy to lease out. Approval leans hard on the leases, tenant quality and net operating income.
Best for: investors buying for cash flow.
Multi-unit residential (5+)
Apartment buildings with five or more units are commercial. CMHC's MLI Select can offer favourable insured terms for meeting affordability, energy or accessibility goals.
Best for: residential rental investors.
Mixed-use
Retail or commercial on the ground floor, residential above, common on BC main streets. Financing blends commercial and residential considerations.
Best for: live-work & main-street buyers.
Land & development
Raw or serviced land, and construction projects. These are higher-risk, usually needing more equity and specialized lenders.
Best for: developers & builders.
Industrial & special-use
Warehouses, shops, and purpose-built spaces. Value and financing hinge on location, use and how easily the space could be re-tenanted.
Best for: trades & operators needing space.
The numbers
Three metrics lenders live by.
Learn these three and most commercial financing conversations suddenly make sense.
NOI — Net Operating Income
The property's income after operating expenses (but before the mortgage). It's the foundation everything else is built on, higher, stable NOI makes a deal financeable.
DSCR — Debt Service Coverage Ratio
NOI divided by the mortgage payments. Lenders typically want a DSCR above 1.20–1.25, meaning the property earns comfortably more than enough to cover the loan. Below that, expect a smaller loan or a decline.
LTV & cap rate
Loan-to-value is the loan as a percentage of the property's value (lower than residential). The cap rate (NOI ÷ price) is how investors gauge return and how appraisers help set value. Together they shape how much a lender will advance.
The path
How to get ready.
Clarify the purpose
Owner-occupied for your business, or an income property? The answer shapes your down payment, lender options and how the deal is assessed. Buying premises for your own trade? My trades and start a business guides pair well with this.
Get your numbers together
Line up your down payment, business and personal financials, tax returns, and, for an income property, the leases and rent roll. Clean, organized numbers move deals forward.
Understand the property's income
Know the NOI and rough DSCR before you fall for a building. If the income doesn't service the debt at typical terms, the financing won't work no matter how much you love it.
Shop the deal
Commercial terms vary far more than residential, so compare banks, credit unions and commercial lenders (and, for multi-unit, insured options like MLI Select). This is where good guidance pays for itself.
Plan for the timeline & costs
Budget time and money for appraisal, legal, and any environmental review, and keep a cash reserve. Commercial closings take longer than a home purchase, so start early.
Questions
Commercial real estate financing FAQ.
How much down payment do I need for commercial real estate?
Typically more than a home, often 20% to 35% or more, depending on the property type, its income and the lender. Owner-occupied properties sometimes allow less down than pure investment properties. The property's income and risk drive the exact figure.
How is a commercial mortgage different from a residential one?
It's assessed heavily on the property's income and its debt service coverage, not just your personal salary. Expect a larger down payment, lower loan-to-value, more due diligence, often a personal guarantee, and terms and amortizations that vary far more by lender and property.
What is DSCR, and what do lenders want?
Debt Service Coverage Ratio compares the property's net operating income to its debt payments. Lenders usually want a DSCR above 1.20 to 1.25, meaning the property earns comfortably more than enough to cover the mortgage. A higher DSCR strengthens your application.
Can I finance an apartment building?
Residential buildings with five or more units are financed as commercial property. CMHC's MLI Select program can offer favourable insured terms for multi-unit residential in exchange for meeting affordability, energy-efficiency or accessibility criteria. Terms and points change, so confirm current details.
Is buying my business premises a good idea?
It can be, owning instead of renting builds equity and stabilizes your costs, and owner-occupied financing is sometimes more accessible. But it ties up capital and adds responsibility. Weigh it against your growth plans with your accountant and a mortgage professional.
Get the next one first
More BC money guides, in your inbox.
Commercial vs residential, refinancing, and buying your first home or building are all on the way. Join the list and I'll send each one as it's ready, no spam, no pitch.
Join the list →Keep going
Down payments, the 2026 rules and the programs that help you buy your first home.
Read the guide → For owner-occupiersRegister and set up the business that will occupy your new premises.
Read the guide → The libraryPlain-English money and mortgage guides for BC, in one place.
Browse financing →This guide is general educational information about financing commercial real estate in British Columbia and reflects the landscape as of 2026. It is not mortgage, financial, lending, tax or legal advice. Commercial lending terms, ratios, programs and eligibility are set by lenders and change frequently and vary by deal, so always verify current details and work with a licensed mortgage professional, your lender, and your accountant and lawyer before making decisions.