Commercial mortgage rates in Canada are one of the first things investors ask about — and one of the last things they actually understand. That is not a knock on anyone. Commercial rates are genuinely more complicated than residential ones. There is no single posted rate. There is no “best five-year fixed” comparison chart. Your rate depends on a mix of factors that are unique to your deal, your property, and how you structure the financing.
This guide breaks down what commercial mortgage rates actually look like in Canada right now, what drives them up or down, and exactly what you can do to lock in the lowest rate possible.
Current Commercial Mortgage Rate Ranges in Canada
Commercial mortgage rates in Canada vary widely depending on the type of financing and the strength of the deal. Here is what you can expect as of early 2026:
| Financing Type | Typical Rate Range | Notes |
|---|---|---|
| CMHC-insured (MLI Standard) | 3.50% - 4.25% | Stabilized multi-family, 5+ units |
| CMHC MLI Select (100+ points) | 3.25% - 3.95% | Premium reductions for affordability/efficiency |
| Conventional (A lender) | 4.50% - 6.50% | Strong borrower, stabilized property |
| Conventional (B lender) | 5.95% - 7.95% | Weaker deal or higher risk profile |
| Bridge / interim financing | 7.00% - 12.00% | Short-term, construction or value-add |
The gap between CMHC-insured and conventional rates is significant. On a $3 million mortgage, the difference between 3.75% and 5.75% works out to $60,000 per year in interest — that is $300,000 over a five-year term. The financing path you choose matters enormously.
These ranges shift with the Bank of Canada’s overnight rate and bond yields, so they will not stay static. But the relative spread between CMHC and conventional has been consistent for years.
Get Your Commercial Rate Quote
What Determines Your Commercial Mortgage Rate
Unlike residential mortgages where your credit score and income drive the rate, commercial mortgage pricing is driven by the property and the deal structure. Here are the key factors lenders evaluate.
1. Property Type
Not all commercial properties are treated equally. Multi-family rental buildings (apartments, purpose-built rentals) are considered lower risk because people always need a place to live. Office, retail, and industrial properties carry higher risk premiums.
A stabilized 20-unit apartment building will get a better rate than a strip mall with three vacancies. Lenders price risk, and residential rental demand is the most predictable income stream in commercial real estate.
2. Loan-to-Value Ratio (LTV)
The more equity you have in the deal, the lower your rate. This is straightforward. A deal at 65% LTV is less risky for the lender than one at 80% LTV. Lower LTV means you are absorbing more of the downside risk, and lenders reward that with better pricing.
With CMHC-insured financing, you can go as high as 85% LTV (or 95% loan-to-cost on new construction with MLI Select), and still get excellent rates because CMHC is insuring the lender against default.
3. Debt Service Coverage Ratio (DSCR)
Your DSCR is the ratio of the property’s net operating income to its total debt service (mortgage payments plus other obligations). A DSCR of 1.30 means the property generates 30% more income than needed to cover debt payments.
Lenders typically want to see a minimum DSCR of 1.20 to 1.30 for conventional deals. CMHC requires a minimum of 1.10 for MLI Select. The higher your DSCR above the minimum, the more room lenders have to offer competitive rates. You can run your numbers through our DSCR loan calculator for Canadian properties to see where your deal falls.
4. Occupancy and Vacancy
A property running at 97% occupancy is a different risk profile than one sitting at 80%. Lenders want to see stable, high occupancy. Properties with long-term tenants and low turnover get better pricing than ones with month-to-month tenancies and frequent vacancies.
For CMHC-insured deals, the property generally needs to demonstrate at least 85% occupancy over a sustained period. Conventional lenders may finance properties with higher vacancy, but they will charge for the additional risk.
5. Location
Properties in major urban centres with strong rental demand — Toronto, Vancouver, Calgary, Edmonton, Ottawa — tend to get better rates than properties in small towns or rural areas. Lenders assess the depth of the rental market: how quickly can units be re-leased if a tenant leaves?
This does not mean rural properties cannot get financed. It means the rate will reflect the additional market risk.
6. Amortization Period
Longer amortization periods mean more interest paid over the life of the loan. Some lenders price longer amortizations slightly higher because the loan balance decreases more slowly, maintaining higher risk exposure for longer.
CMHC programs offer amortizations up to 40 or even 50 years, which dramatically improves cash flow. Conventional lenders typically cap amortization at 25 to 30 years.
7. Borrower Experience and Financial Strength
Even though commercial lending focuses on the property, lenders still look at who is behind the deal. Our guide on how to qualify for a commercial mortgage in Canada covers exactly what lenders want from borrowers. An experienced investor with a track record of successful commercial projects will get better pricing than a first-time buyer.
Net worth, liquidity, and management experience all factor into rate negotiations. This is especially true for conventional lenders who are taking on the full default risk without CMHC insurance.
CMHC-Insured vs Conventional: A Rate Comparison
Understanding the rate difference between these two paths is critical for any commercial deal. Here is how they compare on a real scenario.
Scenario: $5 million apartment building purchase
| Factor | CMHC-Insured | Conventional |
|---|---|---|
| Purchase price | $5,000,000 | $5,000,000 |
| LTV | 85% | 75% |
| Mortgage amount | $4,250,000 | $3,750,000 |
| Down payment | $750,000 | $1,250,000 |
| Interest rate | 3.85% | 5.50% |
| Amortization | 40 years | 25 years |
| Monthly payment | $16,100 | $22,700 |
| Annual interest cost | $163,600 | $206,300 |
| CMHC premium (4.0%) | $170,000 | N/A |
Even with the CMHC insurance premium added to the deal, the CMHC path results in $500,000 less down payment required, $6,600 lower monthly payments, and $42,700 less in annual interest. Over a five-year term, the interest savings alone offset the insurance premium.
The conventional path requires $500,000 more capital upfront. If that capital could earn returns elsewhere, the opportunity cost makes the conventional option even more expensive.
For a detailed look at how these options compare across your specific deal, explore our commercial mortgage financing programs.
Model Your CMHC Financing Options
Fixed vs Variable Rates for Commercial Mortgages
The fixed vs variable debate plays out differently in commercial than in residential.
Fixed Rate Commercial Mortgages
Most commercial mortgages in Canada are fixed rate, typically for terms of 5, 7, or 10 years. Fixed rates provide predictable payments and make it easier to project cash flow. CMHC-insured deals almost always use fixed rates.
The advantage: you know exactly what your payments will be for the entire term. If rates rise, you are protected. The disadvantage: if rates drop, you are locked in. And breaking a fixed commercial mortgage early is expensive — prepayment penalties on commercial deals are often based on a yield maintenance formula, not the simple three-month interest penalty you see in residential.
Variable Rate Commercial Mortgages
Variable rates on commercial mortgages are less common but available through some lenders. They float based on the prime rate or a similar benchmark. Variable rates are sometimes used for bridge loans or shorter-term financing where the borrower plans to refinance or sell within a few years.
Variable rates can save money when rates are declining, but they introduce cash flow uncertainty that makes it harder to underwrite long-term holds.
Which Should You Choose?
For most commercial investors holding income-producing properties, fixed rates make more sense. The predictability matters when you are managing tenants, expenses, and cash flow across a portfolio. Variable rates are better suited for short-term holds or transitional financing where you expect to exit or refinance within one to three years.
How to Lock in the Lowest Commercial Mortgage Rate
Here are practical steps to get the best rate on your next commercial deal.
1. Use a Mortgage Broker Who Specializes in Commercial
Walking into your bank and asking for a commercial mortgage rate is like asking for a car price without specifying the make, model, or year. Commercial lending is relationship-driven and deal-specific. A broker who works with multiple commercial lenders can shop your deal to find the best pricing.
At LendCity, we submit deals to multiple lenders simultaneously and let them compete for your business. That competition typically shaves 25-50 basis points off what you would get going direct to a single institution.
2. Explore CMHC-Insured Financing
If your property is a stabilized multi-family building with 5+ units, CMHC-insured financing will almost always get you the lowest rate. The insurance premium pays for itself through lower interest costs. For a deeper look at how the two paths compare, read our guide to CMHC insured vs conventional commercial mortgages. Use our CMHC MLI max loan calculator to see how much financing your property qualifies for.
3. Maximize Your DSCR
Before applying, look for ways to increase your property’s net operating income. This could mean raising below-market rents to current levels, reducing vacancies, or cutting unnecessary operating expenses. A stronger DSCR gives lenders more confidence and translates directly to better pricing.
4. Bring a Strong Down Payment
Even though CMHC allows high-leverage deals, bringing more equity than the minimum required signals commitment and reduces lender risk. Our breakdown of commercial mortgage down payment requirements in Canada covers the full range by property type. If you can go from 15% down to 20% down, you may get better rate pricing on a conventional deal.
5. Get Your Documentation in Order Early
Lenders move faster and negotiate better when you present a clean, complete package. Have your property financials, rent rolls, appraisal, environmental reports, and personal financial statements organized before you apply. Messy files slow down deals and do not inspire lender confidence.
6. Consider the Full Cost, Not Just the Rate
A 4.5% rate with a 25-year amortization might result in higher monthly payments than a 4.0% rate with a 40-year amortization. Total cost of borrowing includes the rate, amortization, fees, prepayment penalties, and any insurance premiums. Always compare on a total-cost basis.
7. Lock Your Rate Early
Most commercial lenders offer rate locks or rate holds during the application process. In a rising rate environment, locking early protects you from increases between application and closing. Ask about rate lock options and any associated fees.
Rate Lock Options for Commercial Mortgages
Rate locks work differently in commercial than residential. Here is what to expect:
- CMHC-insured deals: Rate locks are typically available once CMHC issues a commitment letter. The lock period usually aligns with the closing timeline, often 60 to 120 days.
- Conventional deals: Rate lock availability and duration vary by lender. Some offer locks at application, others only at commitment. Lock periods range from 30 to 90 days, with extensions sometimes available for a fee.
- Construction financing: Rates may float during construction and lock at conversion to permanent financing. This means your final rate depends on market conditions at completion, not at the start of construction.
Always clarify rate lock terms before committing to a lender. A great quoted rate that is not locked is just an estimate.
Common Mistakes That Lead to Higher Rates
Avoid these pitfalls that cost investors money:
- Only talking to one lender. Competition drives better pricing. Always get multiple quotes.
- Submitting incomplete packages. Missing documents cause delays and signal disorganization. Lenders price risk, and disorganization is a risk signal.
- Ignoring CMHC programs. Some investors dismiss CMHC financing because of the insurance premium without running the numbers. In most cases, the total cost is lower with CMHC.
- Choosing rate over terms. A slightly lower rate with a short amortization or restrictive prepayment terms can cost more in the long run than a marginally higher rate with better overall terms.
- Waiting too long to lock. In rising rate environments, delays between approval and closing can add basis points to your final rate.
If you are planning a multi-family acquisition or refinance, getting your rate strategy right from the start can save tens of thousands of dollars over the life of the loan.
Frequently Asked Questions
What is the average commercial mortgage rate in Canada right now?
Why are commercial mortgage rates higher than residential rates?
Can I negotiate my commercial mortgage rate?
Is it worth paying the CMHC insurance premium to get a lower rate?
How long does it take to get a commercial mortgage rate quote?
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
February 8, 2026
Reading Time
10 min read
Commercial Mortgage
Financing for commercial properties like retail, office, or multifamily buildings with 5+ units, with different qualification criteria than residential mortgages.
Interest Rate
The cost of borrowing money, expressed as a percentage. It determines how much you pay on top of the principal borrowed.
CMHC Insurance
Mortgage default insurance from Canada Mortgage and Housing Corporation. For 1-4 unit investment properties, investors must put 20%+ down (no insurance available). However, CMHC offers MLI Select for 5+ unit multifamily properties, and house hackers can access insured mortgages with 5-10% down.
CMHC MLI Select
A CMHC program offering reduced mortgage insurance premiums and extended amortization (up to 50 years) for multifamily properties with 5+ units that meet energy efficiency or accessibility standards. Popular among investors scaling into larger apartment buildings.
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.
DSCR
Debt Service Coverage Ratio - a metric that compares a property's net operating income to its mortgage payments. A DSCR of 1.25 means the property generates 25% more income than needed to cover the debt. Lenders typically require a minimum DSCR of 1.0 to 1.25 for investment property loans.
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.
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.
Prime Rate
The benchmark interest rate set by banks, which influences variable mortgage rates. It typically follows the Bank of Canada's overnight rate.
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.
Construction Financing
A short-term loan that funds the building or major renovation of a property, disbursed in stages (draws) as construction milestones are completed. Once building is finished, the construction loan is typically replaced with a permanent mortgage through a process called takeout financing. Interest is charged only on the amount drawn.
Hover over terms to see definitions, or visit our glossary for the full list.