100% Financing for Owner-Occupied Commercial Properties Canada

Are you a business owner tired of paying rent on your office, industrial, or medical space? Or a real estate investor who also runs a company and wants maximum leverage on your next commercial purchase? There’s a little-known 100% financing program available across Canada that can let you buy an owner-occupied commercial building with little or no down payment — even in today’s cautious lending environment.

In this episode of the Wisdom Lifestyle Money Show (transcribed and expanded for readers), host Scott Dillingham reveals exactly how this program works, who qualifies, and why most lenders and even large credit unions get the underwriting wrong.

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What Is the 100% Owner-Occupied Commercial Financing Program?

This specialized commercial mortgage program is designed for business owners purchasing the building they will occupy (at least 51% owner-occupied). It’s not a residential mortgage and it’s not a typical investment-property loan. Instead, lenders look primarily at your business’s Net Operating Income (NOI) to determine how much you can borrow — sometimes up to 100% of the purchase price or appraised value.

Key property types that qualify:

• Office buildings

• Medical/dental clinics

• Industrial warehouses

• Manufacturing facilities

• Retail storefronts (owner-occupied portion)

• Mixed-use with significant owner occupancy

The program has been available for years but is still underutilized, especially among real estate investors who also operate a business.

How Net Operating Income (NOI) Drives 100% Financing

The magic happens through NOI adjustments that most lenders miss.

Standard NOI vs. Adjusted NOI for Owner-Occupied Purchases

When you move from renting to owning, your current rent expense disappears. Experienced underwriters add back that rent (and sometimes depreciation, interest, or one-time expenses) to create a stronger income picture.

Example (simplified):

• Current annual rent paid: $120,000

• Business net income before add-backs: $180,000

• Adjusted NOI after adding back rent: $300,000

That single adjustment can push your debt coverage ratio from “declined” to “fully funded.”

Scott shared a real deal where a major Canadian credit union initially rejected a strong file because the underwriter forgot to add back the rent expense. After pushing back with proper calculations, the deal was approved at 90-100% financing.

Debt Coverage Ratio: The Real Approval Trigger

Lenders use a reverse mortgage calculator approach:

• Take your adjusted NOI

• Divide by the annual mortgage payment

• Result = Debt Coverage Ratio (DCR)

Most lenders on this program want a minimum 1.20 DCR (20% surplus income after debt service).

Practical example:

• Adjusted NOI: $400,000/year

• Required DCR: 1.20

• Maximum annual debt service allowed: $400,000 ÷ 1.20 = $333,333

• At current rates and 25-year Amortization, that supports roughly $4–4.5million in financing — even if traditional LTV guidelines cap office buildings at 65%.

If the calculated loan exceeds the property value, you can potentially get 100% financing. If it’s slightly short, 85–95% is still common — far better than standard commercial terms.

Why 100% Financing Matters More in Late 2025 and 2026

As of late 2025, many institutional lenders have tightened office and commercial guidelines:

• Maximum 60–65% LTV on pure investment office

• 70–75% on multi-tenant retail or industrial

• Stricter vacancy and lease-term requirements

The owner-occupied 100% program completely sidesteps those buckets because the lender is betting on **your business **cash flow, not just rental income from tenants.

Result? A dentist, doctor, manufacturer, or real estate investor who runs their own operating company can often borrow 20–35% more than under conventional commercial rules.

Rates, Terms, and Fees: What to Expect

FactorTypical Range (Late 2025)Interest RatePrime + 0.50% to Prime + 2.00% (varies by lender & credit)Amortization20–25 years (some lenders 15–20)Term3–10 years, fully open or closed optionsLender Fees0.5–2% of loan amount (common in commercial)Appraisal & Legal$5,000–$15,000+ depending on property

Rates are competitive with standard commercial mortgages — usually only 0.50–2.00% higher than residential.

Who Qualifies (and Who Doesn’t)

Strong candidates:

• Established businesses with 2–3 years of financials

• Positive or improving profitability

• Moving from leased premises to owned (biggest NOI boost)

• Owner occupancy ≥51%

• Good personal and business credit

Not suitable:

• Startups or businesses with weak/negative cash flow

• Pure investment properties (no owner occupancy)

• Very remote locations (lender coverage limitations)

Why Working with Specialists Beats Going Direct to a Bank

Many large banks and credit unions have this program but their underwriters rarely maximize it. Scott’s team does in-house pre-underwriting to:

• Identify every possible add-back

• Shop multiple lenders with slight DCR variations

• Push back when a lender misses adjustments

• Package the file perfectly the first time

This often turns “no” into “yes” and 75% LTV into 90–100%.

The Liquidity Advantage for Business Owners & Investors

Getting 100% (or near-100%) financing means you keep cash in your business instead of tying it up in a down payment. That liquidity can fund:

• Equipment purchases

• Hiring

• Marketing

• Working capital

• Additional investment properties

Many real estate investors use this program to buy their operating company’s building with almost no money down, then turn around and leverage their personal portfolio for pure investment deals.

Final Thoughts: Is This Program Right for You?

If you’re self-employed, pay rent on commercial space, and have solid business financials, the 100% owner-occupied commercial financing program could be the most powerful tool available in Canada right now.

Even 85–95% financing is life-changing compared to today’s 65% office or 75% industrial caps.

Reach out to a commercial mortgage team that specializes in these files (not just any bank or broker). One overlooked add-back can be the difference between approval and rejection.

Have you used this program or are you considering buying your own building? Drop a comment below and let us know!

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Frequently Asked Questions

Written by

LendCity

Published

December 18, 2025

Tags

Commercial Financing Single Family Down Payment Entrepreneurship Mortgage Basics

Key Terms in This Article

Amortization

Amortization

The period over which a mortgage is scheduled to be fully paid off through regular payments of principal and interest. In Canada, common amortization periods are 25 or 30 years, though the mortgage term (when you renegotiate) is typically 1-5 years.

Appraisal

Appraisal

A professional assessment of a property's market value, required by lenders to ensure the property is worth the loan amount.

Cash Flow

Cash Flow

The money left over after collecting rent and paying all expenses including mortgage, taxes, insurance, maintenance, and property management.

Commercial Mortgage

Commercial Mortgage

Financing for commercial properties like retail, office, or multifamily buildings with 5+ units, with different qualification criteria than residential mortgages.

Down Payment

Down Payment

The upfront cash payment when purchasing a property. For 1-4 unit investment properties, minimum 20% down is required. 5+ unit multifamily can use CMHC MLI Select with lower down payments, and house hackers can put as little as 5% down on owner-occupied 2-4 plexes.

LTV

LTV

Loan-to-Value ratio - the mortgage amount expressed as a percentage of the property's appraised value or purchase price (whichever is lower). An 80% LTV means you're borrowing 80% and putting 20% down. Lower LTV generally means better rates and terms.

Leverage

Leverage

Using borrowed money (mortgage) to control a larger asset, amplifying both potential returns and risks on your investment.

NOI

NOI

Net Operating Income - the total income a property generates minus all operating expenses, but before mortgage payments and income taxes. Calculated as gross rental income minus vacancies, property taxes, insurance, maintenance, and property management fees.

Underwriting

Underwriting

The process lenders use to evaluate the risk of a mortgage application, including reviewing credit, income, assets, and property value to determine loan approval.

Interest Rate

Interest Rate

The cost of borrowing money, expressed as a percentage. It determines how much you pay on top of the principal borrowed.

Hover over terms to see definitions, or visit our glossary for the full list.

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