How to Finance a Commercial Real Estate Purchase in Alberta

Financing a commercial property in Alberta is fundamentally different than residential. Lenders focus less on your personal income and more on the asset’s income, risk profile, and your ability to support the deal through vacancies, renewals, and market cycles.

Whether you’re buying a retail bay in Calgary, an industrial condo in Edmonton, an office/medical unit, or a multi-unit rental building, your approval typically comes down to three things: (1) equity/down payment, (2) property cash flow and debt coverage, and (3) borrower strength and experience.

This guide breaks down the real-world financing paths Alberta buyers use—bank and credit union financing, government-supported small business loans, CMHC-insured multi-unit financing, and private/vendor structures—so you can choose the best route for your specific property and timeline.

Ready to take the next step? (587)-719-5523 / Get in touch or visit MohitDhillon.com with us today to discuss your commercial real estate goals or schedule a personalized property tour.

Commercial Financing Snapshot

What Drives Approval & Terms

Key Highlights

  •  Down payment changes by property + tenant risk
  • LTV sets the max loan ceiling
  • DSCR confirms income can carry payments
  • Lease strength impacts risk (term, renewals, recoveries)
  • Clean documents speed approvals and reduce re-trades

Loan Paths

Most Alberta buyers finance commercial real estate through banks/credit unions for stabilized deals, CMHC-backed insurance for eligible multi-unit rentals, small business financing programs in owner-occupied use cases, or private/bridge/vendor take-back structures when timing is tight or the asset is in transition.

Equity Basics

Commercial down payments aren’t one-size-fits-all because lenders price uncertainty. Vacancy, short lease terms, specialized use, deferred maintenance, and weaker tenant covenants typically push equity requirements up, while stable income history and strong lease profiles tend to support better terms.

DSCR Basics

DSCR is a coverage check that compares the property’s available income (often NOI for real estate; sometimes EBITDA in business underwriting) against required principal and interest payments. The stronger the coverage, the easier it is to secure approvals and the more resilient the deal looks under rate increases or vacancy scenarios.


CMHC Option

If you’re buying eligible multi-unit rental housing, CMHC mortgage loan insurance can materially change financing flexibility, including potential for higher leverage and longer amortizations in qualifying situations. If your project includes commitments tied to affordability, accessibility, or climate/energy outcomes, MLI Select can provide additional incentives such as reduced premiums and longer amortizations (eligibility and scoring dependent).

CSBFP Fit

For owner-operators purchasing a building used directly in business operations, Canada’s Small Business Financing framework can be relevant through participating lenders, with program limits and lender-specific underwriting. This route tends to work best when the business financials, use case, and repayment story are straightforward and well documented.

Approval Pack

Financing speed usually comes down to how clean your file is. A lender-ready package typically includes the purchase contract, rent roll and leases (where applicable), operating statements supporting NOI, borrower liquidity and net worth details, plus lender-ordered appraisal and any screening items triggered by use or history (e.g., environmental review).

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Financing Strategy

How to choose the right lender path without getting re-traded later

The best financing plan matches the property’s reality today. Stabilized, well-leased assets typically align better with conventional bank/credit union underwriting, while transitional assets (vacancy, lease-up, repositioning, major capex) often require bridge/private structures first—then a refinance once income stabilizes.

To protect your leverage during conditions, treat underwriting like due diligence: validate lease terms, confirm what income is actually collectible, and make sure operating expenses and recoveries are clear. Most “surprise” problems show up when rent rolls don’t match leases, NOI is overstated, or capital needs weren’t accounted for before appraisal and lender review.

For multi-unit rental investors, CMHC insurance (and MLI Select where applicable) can be a meaningful advantage when the property and plan meet program requirements. For owner-operators, small business financing programs can be relevant when the use case is clearly owner-occupied and the business fundamentals are bankable.

Tell Us What You Need

MOHIT DHILLON

Your Alberta Business Buying Advisor

Mohit Dhillon

I’m Mohit Dhillon, a Calgary-based real estate advisor focused on commercial and investor acquisitions across Alberta—industrial, retail, office/medical, and multi-unit. I help buyers structure offers with the right conditions, pressure-test cash flow and lease risk, and package lender-ready documentation so financing is smoother and surprises are minimized.

FAQ's

How much down payment do I need for a commercial property in Alberta?
It varies by property type, income stability, tenant strength, and lender risk. Commercial mortgages commonly require more equity than residential because lenders view collateral and cash flow differently.

What is LTV and why does it matter?
LTV (loan-to-value) compares the loan amount to the lender’s view of value and helps determine the maximum loan size.

What is DSCR and why do lenders use it?
DSCR is a coverage ratio lenders use to judge whether cash flow can comfortably service principal and interest, with a buffer for volatility.

Is CMHC financing only for houses?
No. CMHC mortgage loan insurance can apply to eligible multi-unit rental housing and can improve leverage and amortization in qualifying cases.

What is MLI Select?
A CMHC multi-unit insurance option that can provide incentives—such as reduced premiums and longer amortizations—based on commitments tied to affordability, accessibility, and climate/energy outcomes.

Can I use small business financing to buy a building?
Potentially, when the property is used directly in business operations and the lender confirms eligibility, limits, and documentation requirements under the program.

Do commercial lenders usually require an appraisal?
Often, yes. Many lenders order an appraisal to support collateral value and underwriting assumptions.

Why do commercial deals get delayed in financing?
Most delays come from missing leases, unclear rent rolls, weak NOI support, appraisal timing, or lender-required screening items that surface late.

Data is supplied by Pillar 9™ MLS® System. Pillar 9™ is the owner of the copyright in its MLS®System. Data is deemed reliable but is not guaranteed accurate by Pillar 9™.
The trademarks MLS®, Multiple Listing Service® and the associated logos are owned by The Canadian Real Estate Association (CREA) and identify the quality of services provided by real estate professionals who are members of CREA. Used under license.