Commercial mortgage down payments in Toronto and Vancouver by property type

What to take away

Lender policy changes with the market, so confirm current terms with the lender and your lawyer before you make an offer.

Why no official source gives one number

People often search for a single figure such as "25% down for an industrial unit in Mississauga". Official sources do not publish one. Banks and other lenders set a maximum loan-to-value ratio for each deal in their own credit policy, and the ratio depends on the building, the borrower and the market.

BDC defines loan-to-value as the portion of the property's value that the bank will finance. Its guidance says banks generally finance 75% to 100% of commercial real estate value, depending on the building's condition, resaleability and other factors. It adds that any shortfall must usually come from the company's working capital or the owners' personal funds.

The down payment is therefore the other side of that ratio. A lender that finances 70% of value needs 30% from you. A lender that finances 80% needs 20%. The sections below show what pushes the ratio up or down for the property types buyers ask about.

Owner-occupied property

An owner-occupied building is one where the borrower's own business uses most of the space. Lenders usually read it as safer than a pure investment because the business pays the mortgage from its own operations and the borrower has a strong reason to protect the asset.

Two public programs are built around this use.

BDC Commercial Real Estate Loan. BDC says it can finance up to 100% of the project cost depending on the project, and that a down payment may still be required for real estate purchases. Repayment can run up to 25 years, with interest-only payments for up to the first 36 months. It lists typical eligibility conditions: a business registered and active in Canada, typically 24 or more months in business and generating revenue, demonstrated profitability or a clear path to it, and good credit for the business and its owners. Collateral is usually the property itself, possibly with a guarantee. BDC contrasts its approach with commercial mortgages, which it says typically require a 20% to 35% down payment.

Canada Small Business Financing Program (CSBFP). The program backs loans from participating lenders. Under the April 2024 guidelines, the term loan maximum is $1,000,000 per borrower, the borrower must use at least 50% of the land or building area for its business within 90 days after the final disbursement, and the percentage of financing "can be negotiated with the borrower". The registration fee is 2% of the loan and can be financed. The guidelines set maximum interest rates, and the 1.25% annual administration fee can only be charged as part of the interest rate.

The CSBFP loan ceiling matters in these two cities. A $1,000,000 maximum covers only part of the price of most owner-occupied buildings in Toronto or Vancouver, so the program usually sits alongside a conventional mortgage rather than replacing it. The comparison in small business loans in Canada: CSBFP, BDC and banks shows how the three routes divide a file, and how the CSBFP, BDC and bank term loans divide Canadian files covers fit by revenue and asset type.

Retail and industrial property

For retail and industrial buildings the same source applies: BDC's 20% to 35% for commercial mortgages and the 75% to 100% loan-to-value spread. Where within that spread you land is a lender decision, and BDC points to the building's condition and resaleability as the factors.

BDC names condition and resaleability as the deciding factors. In practice:

None of the official pages reviewed assigns a separate percentage to retail versus industrial. Ask each lender for its maximum loan-to-value ratio for your specific building, in writing, before you commit to an offer date.

Multi-unit residential property

Multi-unit rental property is different because mortgage insurance is available. The Canada Mortgage and Housing Corporation (CMHC) says it is the only provider of mortgage loan insurance for multi-unit residential properties in Canada, and that it supports the construction, purchase and refinancing of a variety of multi-unit rental properties. Its product lines include Standard Rental Housing and MLI Select, which offers reduced premiums and longer amortization periods tied to commitments on affordability, accessibility and climate compatibility.

Insurance can change how much a lender is willing to advance against the building, so an insured multi-unit deal may carry a different down payment than an uninsured commercial mortgage. CMHC's overview page does not state the loan-to-value limit, so get the figure for your project from CMHC's product pages or an approved lender, and expect the insurance premium to be an additional cost.

Cash you need besides the down payment

The down payment is not the full cash requirement on closing day. Two transfer taxes matter in these markets.

Ontario and Toronto. The Ontario Land Transfer Tax has no separate non-residential schedule. For land that has no single family residence, or more than two, the standard brackets apply: 0.5% up to $55,000, 1.0% from $55,000 to $250,000, 1.5% from $250,000 to $400,000, and 2.0% above $400,000. The City of Toronto also charges a Municipal Land Transfer Tax and publishes a calculator. Use it for your purchase price rather than assuming the provincial figure is the whole bill.

British Columbia. The property transfer tax is 1% of fair market value up to $200,000, 2% of the portion from $200,000 to $2,000,000, and 3% of the portion above $2,000,000. An extra 2% applies to residential value above $3,000,000, and in mixed-use property only to the residential part.

Add legal fees and any appraisal, environmental or condition reports your lender requires. The U.S.-based example in commercial real estate loan down payments by owner occupancy and loan program lists that kind of closing checklist, but its percentages describe American programs and should not be used for a Canadian deal.

How to plan the equity

Common questions

What is the minimum down payment on a commercial mortgage in Canada?

BDC states that commercial mortgages typically require a 20% to 35% down payment. The actual minimum is set by the lender for each deal.

Can I buy a commercial building with no down payment?

BDC says its Commercial Real Estate Loan can finance up to 100% of the project cost depending on the project, but a down payment may still be required for a purchase. Eligibility conditions apply.

Is the down payment different in Toronto than in Vancouver?

The official sources reviewed do not set separate city figures. Prices and lender appetite differ by market, which changes how much cash a given building needs, but the percentage comes from lender policy.

Does the CSBFP cover a full building purchase?

The term loan maximum is $1,000,000 per borrower, so it may cover only part of a building purchase in either city. The percentage financed is negotiated with the lender.

Do multi-unit buildings need a smaller down payment?

They can, because CMHC insures multi-unit rental mortgages, but the limit depends on the CMHC product and the project. Confirm it with an approved lender.

Official sources