Minimum down payment for commercial mortgages

“How much is the minimum for a downpayment on a commercial purchase? 20% down?”

We get this question a lot. There are many different ways to answer this question. Generally speaking, if a borrower has a strong net worth statement and collateral security a bank or lender may be prepared to lend more than 80% of a property value if they can be granted collateral security by the borrower so that their overall exposure is less than 80%. For example, a borrower may have a personal residence or commercial property that has equity in it and has some cash to purchase a second building. A bank or lender may be prepared to lend more than 65% of the value of the new property being purchased if they can also register a mortgage on the borrower’s other properties.

If a borrower is purchasing a property for their own business use and it is not for investment purposes (defined generally as the borrower’s business occupying more than 50% of the building footprint) then a bank may be prepared to lend past traditional limits especially if the mortgage amount is less than $500,000 as it may qualify for the Canadian Small Business Loan Program.

Every commercial mortgage or business loan transaction is unique and can require creativity to get a client an approval. If you have a transaction you would like us to take a look at, send us a note or use our Commercial Mortgage Calculator or Business Loan Calculatorto see what might be available.

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