Are you a business owner tired of paying rent on your office, industrial, or medical space? Or maybe you’re a real estate investor who also runs a company and wants maximum leverage on your next commercial purchase. There’s a specialized financing program available across Canada that can help you buy an owner-occupied commercial building with little or no down payment—even when lending conditions are tight.
This guide reveals exactly how this program works, who qualifies, and why most lenders and even large credit unions often get the underwriting wrong.
This article focuses on the underwriting process and common mistakes that cause unnecessary rejections — how to calculate adjusted NOI correctly, which add-backs lenders miss, and how to troubleshoot declined applications. For a broad overview of 100% financing for owner-occupied commercial properties, including program basics and qualifying property types, start there first.
What Is Owner-Occupied Commercial Financing?
This specialized commercial mortgage program is designed for business owners purchasing the building they will occupy. To qualify, at least 51% of the property must be owner-occupied. Unlike residential mortgages or typical investment-property loans, lenders focus primarily on 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.
Property Types That Qualify
Several commercial property types work well with this financing approach:
Office buildings, Medical and dental clinics, Industrial warehouses, Manufacturing facilities, Retail storefronts with owner-occupied portions, and Mixed-use buildings with significant owner occupancy.
The program has been available for years but remains underutilized, especially among real estate investors who also operate a business. For standard commercial deals, see our guide to commercial mortgages and what makes them different.
How Net Operating Income Drives Full Financing
The magic happens through NOI adjustments that most lenders miss. Understanding this process can mean the difference between getting approved or rejected.
Standard NOI vs. Adjusted NOI
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.
Here’s a simplified example:
- 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.”
Many deals get rejected simply because the underwriter forgot to add back the rent expense. With proper calculations and the right pushback, these same deals often get approved at 90-100% financing.
If adding back your rent expense could push your adjusted NOI high enough for 100% financing, it is worth running the numbers with a specialist — book a free strategy call with LendCity to see where you stand.
Understanding Debt Coverage Ratio
Lenders use a reverse mortgage calculator approach to determine approval. Here’s how it works:
- Take your adjusted NOI
- Divide by the annual mortgage payment
- The result equals your Debt Coverage Ratio (DCR)
Most lenders on this program require a minimum 1.20 DCR, meaning you need 20% surplus income after debt service. Understanding how debt ratios affect your approval is critical for commercial borrowers.
Practical Example
Let’s say your adjusted NOI is $400,000 per year:
- Required DCR: 1.20
- Maximum annual debt service allowed: $400,000 / 1.20 = $333,333
- At current rates with 25-year amortization, that supports roughly $4–4.5 million in financing
Even if traditional loan-to-value guidelines cap office buildings at 65%, this calculation might qualify you for 100% financing. If the numbers fall slightly short, 85–95% is still common—far better than standard commercial terms.
Why This Matters in Today’s Market
Many institutional lenders have tightened their commercial lending guidelines:
- Maximum 60–65% LTV on pure investment office properties
- 70–75% on multi-tenant retail or industrial
- Stricter vacancy and lease-term requirements
The owner-occupied financing program sidesteps these restrictions because the lender evaluates your business cash flow, not just rental income from tenants.
The 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.
If standard commercial guidelines are capping you at 65% LTV when your business cash flow could support much more, book a free strategy call with us and we will walk through the owner-occupied route together.
Current Rates and Terms
Commercial mortgage rates in Canada currently start around 5-6% for strong borrowers, with owner-occupied properties often qualifying for more favorable terms. Typical loan structures include:
5, 7, or 10-year fixed-rate terms, 25-year amortization periods, Rates typically 0.50–2.00% higher than residential mortgages, and CMHC-insured options available for even better rates.
Owner-occupied borrowers may qualify for up to 90% LTV through standard programs, with the full 100% available for those with strong NOI numbers.
Who Qualifies for This Program
Strong Candidates
You’re likely a good fit if you have:
An established business with 2–3 years of financials, Positive or improving profitability, Plans to move from leased premises to owned property, Owner occupancy of at least 51%, and Good personal and business credit.
Who Should Look Elsewhere
This program isn’t suitable for:
- Startups or businesses with weak or negative cash flow
- Pure investment properties with no owner occupancy
- Very remote locations where lender coverage is limited
Why Work with Specialists Instead of Going Direct
Many large banks and credit unions offer this program, but their underwriters rarely maximize its potential. Experienced commercial mortgage specialists provide significant advantages:
Identifying every possible add-back to boost your NOI, Shopping multiple lenders with varying DCR requirements, Pushing back when a lender misses key adjustments, and Packaging your file perfectly the first time.
This approach often turns rejection into approval and transforms 75% LTV into 90–100% financing.
The Liquidity Advantage
Getting 100% or near-100% financing means you keep cash in your business instead of tying it up in a down payment. That preserved liquidity can fund:
Equipment purchases, new hires, marketing campaigns, Working capital needs, and Additional investment properties.
Many real estate investors use this program to buy their operating company’s building with almost no money down, then use their personal portfolio for pure investment deals. If you’re looking at ways to buy a house with no cash saved for down payment, this commercial approach offers similar leverage.
Step-by-Step Process
Ready to pursue owner-occupied commercial financing? Here’s what to expect:
Step 1: Gather Your Financials
Compile 2-3 years of business financial statements, tax returns, and current rent expense documentation.
Step 2: Calculate Your Adjusted NOI
Work with a specialist to identify all possible add-backs, including rent, depreciation, and one-time expenses.
Step 3: Determine Your Borrowing Power
Use the DCR calculation to understand how much financing your business can support.
Step 4: Find the Right Property
Search for commercial properties that meet the 51% owner-occupancy requirement and fit your business needs.
Step 5: Submit Your Application
Work with an experienced commercial mortgage broker who understands the nuances of owner-occupied financing.
Frequently Asked Questions
What does 100% financing mean?
Can I really get a commercial loan with no down payment?
What credit score do I need?
How long does approval take?
What if my NOI falls short of 100%?
Can I rent out the portion of the building I do not occupy?
What common mistakes cause owner-occupied commercial financing applications to be rejected?
Final Thoughts
If you’re self-employed, currently paying rent on commercial space, and have solid business financials, the owner-occupied commercial financing program could be one of the most powerful tools available to you in Canada.
Even 85–95% financing is major compared to standard 65% office or 75% industrial caps.
The key is working with 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.
Take the time to understand your adjusted NOI, find a specialist who knows how to get the most from your borrowing power, and you might be surprised at how much commercial property you can acquire with minimal cash outlay.
Disclaimer: This article is for informational purposes only and does not constitute financial advice. Consult a licensed mortgage professional before making any financing decisions.
Written by
LendCity
Published
January 30, 2026
Reading time
7 min read
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.
Commercial Mortgage
Financing for commercial properties like retail, office, or multifamily buildings with 5+ units, with different qualification criteria than residential mortgages.
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.
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.
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.
Fixed Rate Mortgage
A mortgage where the interest rate stays the same for the entire term, providing predictable monthly payments regardless of market changes.
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%.
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.
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.
Cash Flow
The money left over after collecting rent and paying all expenses including mortgage, taxes, insurance, maintenance, and property management.
Leverage
Using borrowed money (mortgage) to control a larger asset, amplifying both potential returns and risks on your investment.
Multifamily
Properties with multiple dwelling units, from duplexes to large apartment buildings. Often offer better cash flow and economies of scale.
Credit Score
A numerical rating (300-900 in Canada) that represents your creditworthiness, affecting mortgage rates and approval. 680+ is typically needed for best rates.
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.
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.
Mortgage Broker
A licensed professional who shops multiple lenders to find the best mortgage rates and terms for borrowers. Unlike banks, brokers have access to dozens of lending options.
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.
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. View the full glossary for all terms.