Who lends on commercial property in BC
Commercial property in BC is financed by a wider range of lenders than a house, and each looks at a deal differently. The right fit depends on whether the buyer will occupy the building, the property type, the borrower's track record, and how quickly the deal must close.
| Lender type | Typical role | What to know |
|---|---|---|
| Chartered banks | Owner-occupied premises and stabilized investment property for established borrowers | Ask about guarantees, reporting covenants and prepayment terms as well as rate |
| Credit unions | Commercial mortgages from BC-based institutions | Supervised by the BC Financial Services Authority (BCFSA); deposits at BCFSA-authorized credit unions are guaranteed by CUDIC (BCFSA) |
| BDC | Federal Crown corporation lending to businesses buying or building their own premises | Up to 100% of project cost, up to 25 years to repay, and interest-only for up to the first 36 months (BDC) |
| CMHC-insured lenders | Residential rental buildings of five or more units | Insurance through programs such as MLI Select allows higher leverage and longer amortization (CMHC) |
| Private lenders and MICs | Bridge, construction, land, value-add and time-sensitive deals | Compare rate, lender and broker fees, term length and the exit plan |
| The seller (vendor take-back) | Part of the price is carried by the seller as a mortgage | Can bridge a gap between the first mortgage and the buyer's equity |
A mortgage broker can canvass several of these on a buyer's behalf. See mortgage brokers and BCFSA below.
Underwriting basics: LTV, DSCR and amortization
Commercial lenders size a loan using a few core measures. The exact thresholds depend on the lender, the property type and the borrower, and change with market conditions, so treat any number as a starting point to confirm with the lender.
Loan-to-value (LTV)
LTV is the loan divided by the lower of the purchase price and appraised value. BDC says banks generally offer to finance 75% to 100% of the value of commercial real estate, depending on the building's condition, resale potential and other factors (BDC). Ask early how a lender treats special-purpose buildings, older stock and properties with environmental questions, since condition and resale potential drive the amount. BDC lists an appraisal among the due diligence lenders require (BDC); a REALTOR® opinion of value is not a substitute.
Debt service coverage ratio (DSCR)
DSCR measures how comfortably income covers loan payments. BDC defines it for a business as EBITDA divided by principal and interest (BDC). For an income property, the equivalent calculation uses the property's net operating income. A ratio of 1.0 means every dollar of income goes to the lender. Each lender sets its own minimum; for CMHC's MLI Select, the minimum debt coverage ratio is 1.1 (CMHC).
Amortization and term
Amortization is the period over which the loan would be fully repaid; the term is how long the rate and conditions are fixed before renewal. BDC says the amortization on a commercial real estate term loan usually ranges from 15 to 25 years (BDC). Longer amortizations lower payments and improve DSCR, which is why CMHC-insured multi-unit loans can be sized larger than conventional ones.
What lenders ask for
- Borrower financialsBusiness or personal financial statements, tax returns, a net worth statement and, for businesses, a plan showing profitable operations (BDC).
- Property incomeRent roll, leases, operating statements and property tax notices for income property.
- Third-party reportsAppraisal, environmental assessment, building condition assessment and title search (BDC).
- GuaranteesAsk at the outset whether personal or corporate guarantees will be required, and for how much.
Owner-occupied vs investment property
Lenders treat a business buying its own premises differently from an investor buying a building to lease.
| Owner-occupied | Investment | |
|---|---|---|
| Main repayment source | The operating business's cash flow | Rent from third-party tenants |
| What the lender studies | Business profitability, history and management | Lease terms, tenant quality, vacancy risk and net operating income |
| Programs designed for it | BDC's commercial real estate loan requires the business to have operated for at least 24 months and to show profitability (BDC) | Conventional bank and credit union mortgages; CMHC-insured loans for residential rental buildings |
| Related financing to ask about | Renovation costs rolled into the mortgage, leasehold improvement and equipment loans (BDC) | Whether the lender will hold back funds for vacancy, leasing or capital work |
If an owner-user buys a larger building and leases part of it, ask the lender how it will treat the leased portion. Some owners buy through a holding company and lease to their operating company; that structure has tax and legal consequences, so involve an accountant and lawyer. For the reverse move, see sale-leaseback in BC.
CMHC-insured multi-unit financing and MLI Select
For residential rental buildings, CMHC mortgage loan insurance lets approved lenders lend more, over longer amortizations, than they would conventionally (CMHC). MLI Select, CMHC's points-based product, rewards commitments in affordability, energy efficiency and accessibility. According to CMHC's MLI Select page (updated September 21, 2026), the program applies to properties with at least five units, caps non-residential space at 30% of gross floor area or total lending value, and offers these flexibilities (CMHC):
| Points | Max LTV (existing) / LTC (new construction) | Max amortization | Min DCR | Recourse |
|---|---|---|---|---|
| 50+ | Up to 85% / up to 95% | Up to 40 years | 1.1 | Recourse |
| 70+ | Up to 95% / up to 95% | Up to 45 years | 1.1 | Recourse |
| 100+ | Up to 95% / up to 95% | Up to 50 years | 1.1 | Limited recourse |
Premium reductions also apply by tier, and affordability commitments run a minimum of 10 years. CMHC updates these criteria regularly, and an approved lender or broker applies for the insurance, so confirm current terms before relying on them. Mixed-use buildings above the 30% non-residential cap do not qualify. For apartment acquisitions generally, see buying an apartment building in BC.
Private lenders, MICs and vendor take-backs
Private lenders and mortgage investment corporations. A mortgage investment corporation (MIC) is a pooled lending company that meets the definition in section 130.1 of the federal Income Tax Act (Income Tax Act). Buyers turn to MICs and other private lenders for deals a bank or credit union declines or cannot close in time, such as land, construction or properties needing work. Before committing, compare the rate, lender and broker fees, prepayment terms and term length, and have a realistic exit plan (refinance or sale) before the term ends.
Vendor take-back (VTB) mortgages. BDC notes that a property owner may offer vendor financing to a buyer (BDC). In a VTB the seller carries part of the price as a mortgage, usually behind the first lender. Points to settle include interest rate, term, whether the first lender permits secondary financing, and the seller's rights if the buyer defaults. Vendor financing can also appear as a sales incentive: in July 2025, one West Kelowna industrial strata project was reported to be offering vendor financing and lower deposit structures (Okanagan Edge). A VTB has tax implications for the seller; see an accountant.
Mortgage brokers and BCFSA
In BC, mortgage brokers are regulated by BCFSA. Before working with a broker, check registration using BCFSA's Find a Mortgage Broker search; BCFSA warns that consumers who use unregistered brokers are not protected by the Mortgage Brokers Act (BCFSA). The Mortgage Brokers Act is being replaced: BCFSA states that the new Mortgage Services Act comes into force on October 13, 2026, and that brokers remain under the existing Act until then (BCFSA).
The same check applies when a broker arranges a private loan or offers an investment in a mortgage pool.
Specialty and cannabis properties
Special-purpose properties, such as greenhouses, processing plants, hospitality and cannabis facilities, depend heavily on how a lender views resale potential, which BDC identifies as a factor in how much banks lend (BDC). Fewer lenders may participate, so start lender conversations early. Cannabis-specific lending is covered separately on the sister site's guide to financing cannabis real estate.
How Commercial Real Estate Group can help
Sean Phillips, REALTOR® with Coldwell Banker Executives Realty, works with buyers across BC to assemble the rent rolls, leases, property data and timelines lenders need, and to build financing conditions into offers. Commercial Real Estate Group does not arrange mortgages; financing comes from lenders and registered brokers. See buying commercial property or book a free 10-minute Zoom intro.