Commercial mortgage rates in Canada are not standardized posted rates but are bespoke quotes built from a benchmark bond yield plus a risk-based spread. As of October 2026, estimated rates for CMHC-insured multi-family loans can range from approximately 4.79% to 5.54%, while conventional financing for other property types often starts higher, such as 6.22% for large multi-family loans. The final rate a Canadian borrower receives is determined by the property type, loan-to-value ratio, debt service coverage, and the borrower's financial strength. Understanding how these rates are constructed is essential for business owners and investors seeking financing for income-producing real estate.
How Commercial Mortgage Rates Are Constructed
Unlike residential mortgages which often have advertised posted rates, commercial mortgage rates in Canada are individually priced for each deal. The rate is built from two primary components a benchmark interest rate and a lender's risk-based spread. For fixed-rate commercial mortgages, the foundational benchmark is typically the yield on the Government of Canada bond that matches the loan term, most commonly the five-year Canada Mortgage Bond. As of October 20, 2026, the five-year CMB yield was 3.79 percent. Lenders then add a credit spread on top of this benchmark yield to determine the final interest rate offered to the borrower. This spread compensates the lender for the specific risk of the loan and can vary significantly. For CMHC Multi Unit Insurance Select program deals, LendCity's estimated spread range as of October 2026 is 1.05 to 1.80 percentage points, leading to the all-in rate estimate of 4.79 to 5.54 percent. The final quoted rate is therefore the sum of the current bond yield and the negotiated spread, with potential adjustments for CMHC premium discounts.
Key Factors That Determine Your Rate
Lenders assess a multitude of factors when setting the credit spread and final rate for a commercial mortgage application. The type of property being financed is a primary determinant, as different asset classes carry varying levels of perceived risk and liquidity. Multi-family residential properties, especially those eligible for CMHC insurance, consistently qualify for the lowest available spreads and rates. Office, retail, industrial, and hotel properties are priced with wider spreads, reflecting higher risk premiums. The loan-to-value ratio is another critical input, with lower LTV deals typically receiving more favorable pricing. Lenders also rigorously analyze the property's net operating income and the resulting debt service coverage ratio, with a common minimum DSCR requirement of 1.20. Strong, consistent occupancy history and a location in a stable market are viewed favorably. Finally, the financial strength and track record of the borrowing entity or sponsor significantly influence the lender's risk assessment and the offered rate.
Financing Paths and Corresponding Rate Ranges
Commercial borrowers in Canada typically access financing through several distinct channels, each with its own typical rate and term structures. The CMHC Multi Unit Insurance programs, including MLI Select, are designed for qualifying multi-family residential properties and offer the most competitive rates and highest leverage. MLI Select can provide loan-to-value ratios up to 95 percent and amortization periods up to 50 years for new construction or acquisitions meeting specific affordability, energy, and accessibility points. Conventional financing from major banks and credit unions, often called A-lender financing, is available for stabilized income-producing properties including apartments, office, retail, and industrial. These loans generally offer LTVs up to 85 percent, amortizations up to 40 years, and are priced at the bond yield plus a lender spread. For construction projects, value-add renovations, or deals that do not meet conventional guidelines, bridge or private lending is an option. This financing is usually priced at a premium above the lender's prime rate and features shorter terms, with the expectation of a takeout loan from a conventional or CMHC lender once the property is stabilized.
- CMHC MLI Select: Up to 95% LTV, up to 50-year amortization, lowest rates.
- Conventional A-Lender: Up to 85% LTV, up to 40-year amortization, priced at CMB + spread.
- Conventional for Non-CMHC Properties: Up to 75% LTV, up to 30-year amortization for office, retail, industrial.
- Bridge/Private Lending: Up to 80% LTV, interest-only common, priced above prime.
Current Rate Estimates and Market Context
Commercial mortgage rates are dynamic and change with movements in the underlying bond markets and lender risk appetites. As of October 2026, specific rate estimates provide a snapshot of the market. For CMHC-insured multi-family loans under the MLI Select program, the estimated rate range is 4.79 to 5.54 percent, based on a five-year CMB yield of 3.79 percent plus a spread of 1.05 to 1.80 percent. This insured pricing follows the national Canada Mortgage Bond yield, so the estimate is consistent across all provinces. For conventional financing, rates are higher and vary by property type. As of October 21, 2026, commercial mortgage rates for multi-family loans over six million dollars were reported starting at 6.22 percent. Rates for apartment loans under six million dollars started at 6.60 percent, while loans for other commercial property types like retail or office could start at 7.00 percent or higher. It is important to understand that these are starting points or estimates for best-case scenarios, and the final rate for any specific deal is subject to full underwriting approval.
Fixed Versus Variable Rate Options
Commercial mortgages in Canada are available with both fixed and variable interest rate structures, each with distinct characteristics. A fixed-rate mortgage locks in the interest rate for the entire term of the loan, providing payment certainty. This rate is priced directly from the corresponding Government of Canada bond yield at the time of commitment. Fixed rates are common for CMHC-insured multi-family loans and for longer-term conventional financing. A variable-rate mortgage has an interest rate that fluctuates with the lender's prime lending rate, which itself moves in relation to the Bank of Canada's policy rate. This means the borrower's payment amount can change during the loan term if the prime rate changes. Variable rates can sometimes offer a lower initial rate compared to fixed rates but introduce payment volatility. They appear more frequently in shorter-term conventional loans or construction financing. The choice between fixed and variable should align with the borrower's holding period for the property and the capacity of the property's cash flow to absorb potential payment increases.
The Commercial Mortgage Application Process
Securing a commercial mortgage involves a detailed and documented process that differs from residential mortgage applications. The first step is typically a pre-qualification or initial assessment, where the borrower provides basic details about the property and their financial situation to a lender or broker. Following this, the borrower submits a formal application package. This package must include comprehensive documentation such as several years of the business's financial statements and tax returns, personal financial statements from the principals, a detailed property rent roll and operating statements, a professional appraisal of the property, and a business plan or mortgage proposal. The lender then undertakes a rigorous underwriting process, analyzing the property's income, expenses, valuation, and the borrower's creditworthiness. If approved, the lender issues a commitment letter outlining the loan terms, conditions, and interest rate. It is crucial to confirm the lock's terms, including whether the rate can float down if market yields fall and the consequences of missing the closing deadline.
Common Requirements and Eligibility Criteria
Lenders establish specific eligibility criteria to manage risk in commercial mortgage lending. A fundamental requirement is a strong debt service coverage ratio, which measures the property's net operating income relative to its annual mortgage debt obligations. A DSCR of 1.20 or higher is a common minimum threshold, meaning the property's income exceeds its debt payments by at least 20 percent. Loan-to-value limits are strictly enforced, with maximums varying by financing path. The property must be income-producing, and lenders will scrutinize its occupancy history, lease quality, and physical condition. Borrowers, whether individuals or corporate entities, must demonstrate strong credit histories and sufficient financial net worth to support the loan guarantee. For larger loans or complex deals, lenders may require principals to provide personal guarantees. The property's location within a stable or growing market is also a key consideration during the underwriting review.
Provincial Considerations and Rate Locks
While the core mechanics of commercial mortgage pricing are consistent across Canada, there are important provincial considerations. For CMHC-insured loans, the pricing is based on the national Canada Mortgage Bond yield, so the rate estimate for the MLI Select program is the same in Ontario, British Columbia, Alberta, and all other provinces. However, for conventional financing not backed by CMHC insurance, lender competition and regional market conditions can influence the credit spread applied to the bond yield. Lenders may assess economic conditions, real estate market stability, and legal processes differently by province, which can affect the final quoted rate. This is why published rate ranges for conventional deals are not province-specific, and borrowers must obtain a custom quote for their specific property and location. A critical tool during the application process is the rate lock agreement. Borrowers should explicitly confirm the lock period, any fees associated with it, and the lender's policy if market rates decrease before closing.
| Financing Type | Typical Max LTV | Typical Max Amortization | Key Property Types |
|---|---|---|---|
| CMHC MLI Select | Up to 95% | Up to 50 years | New or existing 5+ unit rentals meeting points |
| Conventional Stabilized | Up to 85% | Up to 40 years | Stabilized apartments, no points requirement |
| Conventional Other | Up to 75% | Up to 30 years | Office, retail, industrial, mixed-use |
| Bridge/Private | Up to 80% | Interest-only common | Construction, value-add, non-bankable deals |
Frequently asked questions
What is the current commercial mortgage rate in Canada?
There is no single current commercial mortgage rate in Canada, as rates are bespoke. As of October 2026, estimates for CMHC-insured multi-family loans range from 4.79% to 5.54%. For conventional financing, rates vary by property type, with examples starting at 6.22% for large multi-family loans and higher for other commercial properties. The final rate for any deal is determined by adding a risk-based spread to a benchmark bond yield.
Can I get a fixed-rate commercial mortgage in Canada?
Yes, fixed-rate commercial mortgages are widely available in Canada from banks, credit unions, and other lenders. Terms commonly range from one to ten years, with five-year terms being very popular. The fixed interest rate is priced from the corresponding Government of Canada bond yield at the time of commitment. Fixed rates provide payment certainty for the loan term and are standard for CMHC-insured multi-family financing.
What is the maximum amortization for a commercial mortgage?
The maximum amortization period for a commercial mortgage depends on the financing path. For CMHC MLI Select insured loans, amortization can be up to 50 years for qualifying new construction or acquisitions. For conventional financing on stabilized properties, maximum amortization is typically up to 40 years. For conventional loans on non-CMHC eligible properties like office or retail, amortization is often limited to 30 years.
How are commercial mortgage rates calculated?
Commercial mortgage rates are calculated by starting with a benchmark interest rate, usually the yield on a Government of Canada bond matching the loan term. Lenders then add a credit spread that reflects the specific risk of the loan, based on factors like property type, loan to value ratio, and borrower strength. For example, a rate might be the 5 year Canada Mortgage Bond yield of 3.79 percent plus a spread of 1.80 percent, resulting in a 5.59 percent interest rate. Fixed commercial rates follow Government of Canada bond yields, which the Bank of Canada publishes. Unlike residential mortgages with posted rates, commercial rates are bespoke and lenders start with the bond yield for your term, then add a spread based on deal risk. The inputs that move the rate are property type, LTV, DSCR, occupancy, location, amortization, and borrower strength.
What is the difference between a commercial and residential mortgage rate?
Commercial mortgage rates are typically higher than residential rates due to perceived greater risk. Commercial loans also have different structures, such as lower maximum loan to value ratios, often 85 percent versus 95 percent for residential, and shorter maximum amortization periods, commonly 25 to 40 years versus up to 30 years for residential. Commercial rates are negotiated per deal based on property cash flow, while residential rates are often posted. One thing that makes commercial mortgages riskier is that the property can be harder to liquidate. As a result, these loans tend to come with higher interest rates and other fees. Commercial mortgages generally have lower loan to value ratios than residential mortgages, as well as shorter amortization periods.
What is a good debt service coverage ratio for a commercial mortgage?
A strong debt service coverage ratio is a key requirement for commercial mortgage approval. Conventional A lender financing is priced at the 5 year CMB plus a lender spread, with strong NOI and DSCR 1.20 plus. The financial strength of your company also influences the rate you will receive, since banks use higher rates when giving loans to borrowers they deem riskier. Lenders price every asset class differently, and the spread added on top of the bond yield is based on property type, LTV, and sponsor strength.
Sources and further reading
- Commercial Mortgage, RBC Royal Bank rbcroyalbank.com
- Commercial Mortgage Rates Canada 4.79–5.54% lendcity.ca
- What is a commercial mortgage? | Definition + Calculator bdc.ca
- Compare best mortgage rates in Canada today ratehub.ca
- Commercial mortgage rates start at - 6.22% selectcommercial.com
This article explains how things work and is not financial, tax or legal advice. Rules, limits and rates change, so check the current figures with the Canada Revenue Agency, your province or your financial institution before you act.