When the deal is income-producing, the lender reads the property — not just you.
Commercial and multi-unit mortgages qualify differently. Net operating income, DSCR, and cap rates matter as much as your personal income. Getting this right means accessing more capital at better terms.
The underwriting model changes completely at 5+ units
A 1–4 unit residential property qualifies on your personal income. At 5 units or more, lenders shift to DSCR (Debt Service Coverage Ratio) — the property’s net operating income relative to the mortgage payment. A building with strong rents and low vacancy can qualify for more financing than your personal income alone would support. This is the leverage lever that sophisticated investors use.
What qualifies as commercial / multi-unit
- 5+ unit apartment buildings (residential multi-family)
- Mixed-use: retail/office on ground, residential above
- Small commercial: plaza, retail strip, office building
- Industrial: warehouse, light manufacturing, flex space
- 4-plex or under: residential rules, but investment pricing
- Medical, dental, professional owner-occupied commercial
How commercial deals are underwritten
- DSCR ≥ 1.20: NOI must cover debt service 1.2x (most lenders)
- LTV: typically 65–75% for commercial; up to 85% for CMHC MLI
- Cap Rate: NOI ÷ purchase price; lender applies their own cap to stress-test value
- Vacancy allowance: lender deducts 5–10% of gross rent before calculating NOI
- Amortization: up to 25 years (CMHC MLI up to 50 years with scoring)
- Personal guarantee: typically required even for corporate borrowers
CMHC MLI Select — the most important program most investors miss
CMHC MLI Select
Insured multi-unit financing for 5+ unit properties. Up to 85% LTV, 50-year amortization possible, below-market rates. Points earned for affordability, energy efficiency, and accessibility commitments. Game-changing for purpose-built rental.
CMHC Apartment Construction Loan
Targeted at new purpose-built rentals. Preferential financing to add supply to the rental market. Combined with MLI Select, this program has unlocked new construction economics for Ontario developers.
A-Lender Commercial (Schedule 1 Banks)
For well-established investors and owner-occupied commercial. Strong personal financials + clean property financials unlock competitive commercial rates, typically 5–year fixed terms.
B-Lender & Private Lenders
For transitional properties, value-add opportunities, or borrowers with complex personal income. Bridge financing while stabilizing occupancy before refinancing into permanent financing.
Rent Roll
Current leases showing unit, tenant, monthly rent, lease start/end. This is the primary income document for multi-unit qualifying.
Operating Statement (T776)
Schedule T776 from your tax return showing rental income and expenses for each property. 2 years preferred.
Property Financials
NOI calculation: gross rents minus vacancy allowance minus operating expenses (taxes, insurance, maintenance, management). Lender builds this independently and compares to yours.
Environmental Reports
Phase 1 ESA required for most commercial. Phase 2 if Phase 1 identifies concerns. Lender will not fund without a clean environmental report.
Purchase Agreement or Appraisal
Accepted offer or AACI-designated appraisal. Commercial appraisals use income, cost, and comparable approaches — budget $3,000–$7,000.
Corporate Documents
Articles of incorporation, shareholder register, CRA business number confirmation if borrowing through a corporation.
Commercial deals need a broker who speaks the lender’s language
I build the lender’s view of your property income before submission so there are no surprises in underwriting.
MLI Select scoring is nuanced. I identify how to maximize your points tier for the best possible insurance premium and amortization.
Commercial deals often require underwriter-level conversations. I have those relationships — not just online submissions.
Personal vs. corporate borrowing, cross-collateralization options, bridge-to-permanent financing structures — all considered before submission.
Commercial & Multi-Unit Mortgage: How DSCR and MLI Select Work
The short version — and you can always call for the full picture.
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