FinReady

Commercial Mortgage Rates in Canada 2026: What SMEs Are Actually Paying

Everyone talks about residential mortgage rates. Nobody talks about what small businesses actually pay for commercial real estate financing. Let me fix that.

Current commercial mortgage rates (early 2026)

• Conventional commercial mortgage (insured): 5.25% to 6.50%
• Conventional commercial mortgage (uninsured): 5.75% to 7.50%
• CSBFP-backed commercial property: Prime + 3% ≈ 7.75% to 8.00%
• BDC commercial mortgage: 7.00% to 9.00%
• Private lenders: 8.00% to 14.00% (avoid if possible)

Why commercial rates are higher than residential

Three reasons. First, the loan amounts are bigger, so the absolute risk is higher. Second, commercial properties are harder to sell if you default — there's no CMHC insurance backstop like there is for residential. Third, the income stream backing the loan (your business revenue) is less predictable than a salaried employee's paycheque.

How to get the best rate

The spread between the best and worst commercial rate on the same property can be 200 to 300 basis points. On a $1M mortgage over 25 years, that's $150,000 to $250,000 in extra interest. Here's how to land on the low end:

1. Higher down payment — 25% gets you a better rate than 15%. Every percentage point of down payment reduces the lender's risk and your rate.
2. Strong DSCR — Above 1.50x and lenders will sharpen their pencils for you.
3. Clean financials — CPA-prepared statements, not QuickBooks printouts.
4. Multiple quotes — Get at least 3 quotes. Use them against each other. Commercial lending is negotiable in ways that residential isn't.
5. Relationship — If you've banked with the same institution for 10+ years and have a track record, leverage it.

Fixed vs variable in 2026

With the Bank of Canada in an easing cycle, variable rates are trending down. For a 5-year term, variable might save you money. For 10+ years, lock in a fixed rate — the certainty is worth the premium. For anything in between, get your banker to quote both and compare the total cost over the full term.