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.
This article provides a comprehensive overview of the 100% owner-occupied commercial financing program — what it is, how it works, qualifying property types, and how it compares to traditional commercial lending. For a deep dive into common underwriting mistakes that kill zero-down commercial deals, including detailed DCR calculation examples and troubleshooting rejected applications, see that focused guide.
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 (see our guide to office building investment for beginners)
-
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 investors needing development mortgage financing who also operate a business. Understanding top leverage strategies for real estate and stock investing helps entrepreneurs maximize returns across all asset classes.
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.
If your current rent is over $100,000 a year and your business is profitable, you could be a strong candidate for this program — book a free strategy call with LendCity to see how the NOI add-back works for your numbers.
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.
For multifamily properties, use our free CMHC MLI Max Loan Calculator to estimate maximum CMHC insured financing available for rental buildings.
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.
With many institutional lenders capping office LTV at 60 to 65 percent, this owner-occupied program could unlock 20 to 35 percent more borrowing power — book a free strategy call with us to find out if you qualify.
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 scores
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
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
-
Additional office or commercial 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!
Frequently Asked Questions
What Does 100% Financing Mean?
What Is a 100% Commercial Loan?
Can You Get 100% Financing on Commercial Real Estate?
How Does Commercial Financing Work?
What Are the Commercial Loan Rates in Canada?
What Is the Minimum Down Payment for a Commercial Property in Canada?
Can You Get 100% Financing for Commercial Vehicles?
How to Get 100% Financing for Business Acquisition?
Disclaimer: LendCity Mortgages is a licensed mortgage brokerage, and our team includes experienced real estate investors. While we are qualified to provide mortgage-related guidance, the broader financial, tax, and legal information in this article is provided for educational purposes only and does not constitute financial planning, tax, or legal advice. For matters outside mortgage financing, we recommend consulting a Chartered Professional Accountant (CPA), licensed financial planner, or qualified legal advisor.
Written by
LendCity
Published
December 18, 2025
Reading Time
8 min read
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
A professional assessment of a property's market value, required by lenders to ensure the property is worth the loan amount.
Cash Flow
The money left over after collecting rent and paying all expenses including mortgage, taxes, insurance, maintenance, and property management.
Commercial Mortgage
Financing for commercial properties like retail, office, or multifamily buildings with 5+ units, with different qualification criteria than residential mortgages.
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
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
Using borrowed money (mortgage) to control a larger asset, amplifying both potential returns and risks on your investment.
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
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
The cost of borrowing money, expressed as a percentage. It determines how much you pay on top of the principal borrowed.
Coverage Ratio
A measure of a property's ability to cover its debt payments, typically referring to DSCR. Commercial lenders often require a minimum of 1.2, meaning the property's net operating income exceeds debt payments by at least 20%.
Commercial Lending
Financing for commercial real estate or business purposes, typically qualified based on property income (NOI) rather than personal income. Includes mortgages for multifamily buildings (5+ units), retail, office, and industrial properties.
Vacancy Rate
The percentage of rental units that are unoccupied over a given period. A critical factor in cash flow analysis, typically estimated at 4-8% for conservative projections.
Seller Financing
A financing arrangement where the property seller acts as the lender, allowing the buyer to make payments directly to them instead of obtaining a traditional mortgage.
Rental Income
Revenue generated from tenants paying rent on an investment property. Gross rental income is the total collected before expenses, while net rental income subtracts operating costs to show actual profitability.
A Lender
A major bank or institutional lender offering the most competitive mortgage rates and terms but with the strictest qualification criteria, including full income verification and stress test compliance. Most investors use A lenders for their first four to six properties.
Credit Union
A member-owned financial cooperative that provides banking services including mortgage lending. Credit unions often have more flexible lending policies for real estate investors than major banks, particularly for borrowers who have exceeded conventional lending limits.
Depreciation
An accounting method that allocates the cost of a building over its useful life as a tax deduction. In US real estate, depreciation reduces taxable rental income. The Canadian equivalent is Capital Cost Allowance (CCA).
Mixed-Use Property
A building that combines residential and commercial uses, such as retail on the ground floor with apartments above. Mixed-use properties can diversify income streams and may qualify for commercial financing terms.
100% Financing
A mortgage structure where no down payment is required from the borrower's personal funds. In Canada, this is available for owner-occupied commercial properties through CMHC programs and for residential purchases using gifted down payments, borrowed down payments (where permitted), or vendor take-back mortgages combined with a first mortgage.
Hover over terms to see definitions, or visit our glossary for the full list.