Definition
The commercial mortgage finances the acquisition, construction or refinancing of properties for non-residential use or large residential use (5+ units).
**Types of commercial properties**: - Office - Retail (retail stores, shopping centres) - Industrial (warehouses, factories) - Hospitality (hotels, motels) - Residential income properties (5+ units) - Development and land
**Differences vs. residential**: - No standardized regulatory stress test (OSFI B-20 targets residential) - Qualification based on the property's DSCR (Debt Service Coverage Ratio), not just the borrower's income - Typical amortization: 20-25 years (vs. 25-30 years in residential) - Maximum LTV: 65-75% (vs. 80-95% in insured residential) - Appraisal by AIC-designated appraiser mandatory - Longer financing phase (30-120 days)
**DSCR (Debt Service Coverage Ratio)**: Net Operating Income (NOI) ÷ Annual Debt Service ≥ 1.20-1.25x Example: NOI $150,000 ÷ Annual payments $120,000 = DSCR 1.25x (limit)
**Active lenders**: Chartered banks, credit unions, life insurance companies (long-term financing), CMHC (rental property program), private funds (development).