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Mortgage Squad Advisors
Vaughan, Ontario · FSRA #13737

Commercial Mortgage
Calculator — DSCR
& Cap Rate.

Enter the property income and loan terms to instantly see your DSCR, cap rate, LTV, and monthly payment — the same numbers your lender runs.

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Commercial DSCR + cap-rate calculator.

Fact-checked by Surrayya Afzal, Principal Broker, FSRA #M14001433·Last reviewed October 2026
The short answer

Commercial lenders look at the property's income. Most want a debt service coverage ratio (DSCR) of 1.20 to 1.25: net operating income ÷ yearly mortgage payments.

Your numbers

DSCR
1.31
Meets typical lender minimum
Loan amount$1,680,000
Loan-to-value (LTV)70.0%
Monthly debt service$10,699
Annual debt service$128,386
Annual cashflow$39,614
Cap rate7.00%

Where your DSCR lands

At 1.31, this deal is meets typical lender minimum. Lenders read DSCR as a cushion: every $1.00 of mortgage payment is covered by $1.31 of NOI.

1.10 decline line1.20 min1.40 best1.60+

Where your money goes

Total interest vs. principal over the full 25-year amortization at 5.95%

Total cost
$3,209,661
Principal$1,680,000 (52%)
Interest$1,529,661 (48%)
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Mortgage Squad Advisors · FSRA #13737 · Licensed in Ontario only.

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Your inputs and results in one page you can keep.

Read the full explanationThe rules behind the numbers, with worked examples.

How commercial mortgages are underwritten

Commercial lending flips the residential logic on its head: the property qualifies, not you. The gate is Debt Service Coverage Ratio — net operating income divided by the annual mortgage payment. Most lenders want DSCR ≥ 1.20-1.25 on stabilized income property; below 1.10 is usually a decline, and above 1.40 earns the sharpest pricing. Your personal income and net worth still matter as a backstop (the "sponsor strength"), but the cashflow drives the deal.

Leverage and amortization

Conventional commercial tops out at 65-75% loan-to-value — so budget for 25-35% down — over a 20-25 year amortization. Asset class sets the band: well-tenanted multifamily and owner-occupied get the higher leverage and longer amortization; single-tenant, specialty, and hospitality assets get less and price wider. The principal-vs-interest donut above shows how front-loaded the interest is over a 25-year term.

The big exception is CMHC MLI Select for 5+ unit residential: stacking energy, affordability, and accessibility points can unlock far higher leverage (up to 95%), up to 50-year amortization at the top points tier, and insured pricing typically well below uninsured commercial, which also lifts DSCR by shrinking the payment. Running a multifamily file? Compare it against our rental cashflow calculator to see the NOI build-up.

Amortization schedule

How your balance falls — and how the interest/principal split shifts — over 25 years.

$1,680,000$1,260,000$840,000$420,000$0Now5y10y15y20y25y
YearPrincipal paidInterest paidBalance
1$30,455$97,931$1,649,545
2$32,294$96,092$1,617,251
3$34,244$94,142$1,583,006
4$36,312$92,074$1,546,694
5$38,505$89,882$1,508,189
6$40,830$87,556$1,467,359
7$43,296$85,091$1,424,063
8$45,910$82,476$1,378,153
9$48,682$79,704$1,329,471
10$51,622$76,765$1,277,849
How to use this calculator
  1. Enter the property incomeAdd the net operating income (gross rent minus operating expenses, excluding the mortgage) and the purchase price or appraised value.
  2. Set your loan termsEnter your down payment, interest rate, and amortization period. The calculator shows your monthly payment, LTV, and annual cashflow instantly.
  3. Review DSCR and speak to a brokerCheck whether your DSCR clears the 1.20 lender threshold. If you're close or need guidance on structure, book a call — we shop 100+ lenders for commercial files.
How this is calculated
Payments use semi-annual compounding (Canadian mortgage convention). Some commercial lenders use monthly compounding, which raises the payment slightly. Total interest assumes the same rate for the entire amortization, while commercial terms are usually 5 to 10 years. Lender appetites vary by asset class. CMHC MLI Select multi-family can offer higher leverage with affordability/energy/accessibility concessions. Sponsor strength can offset DSCR weakness on owner-occupied files.
FAQ

Common questions

Don’t see yours? Ask Maya.

What is DSCR and how is it calculated?
Debt Service Coverage Ratio = Net Operating Income ÷ Annual Mortgage Payment. NOI = gross rent − operating expenses (excluding the mortgage). DSCR of 1.25 means the property generates 25% more cashflow than the mortgage payment. Most commercial lenders want minimum 1.20-1.25.
What DSCR do I need to get approved?
The common floor is 1.20-1.25 for stabilized income property. At 1.10-1.20 you're marginal and the deal leans on sponsor strength, liquidity, and the asset class. Above 1.40 you're into best-pricing territory. CMHC MLI Select multifamily can clear at a lower coverage (a 1.10 minimum for standard rental housing, per CMHC) because the insurance de-risks the lender.
What's a good cap rate for Canadian commercial property?
Depends on asset class + market. As illustrative broker estimates (October 2026, not a market survey): Multifamily (5+ unit) in GTA: 4.5-5.5%. Retail strip: 5.5-7%. Industrial: 5-6.5%. Hospitality: 7-10% but higher risk. Higher cap rate = more cashflow per dollar invested but typically signals more risk.
How is commercial different from residential lending?
Commercial qualifies on the property's cashflow (DSCR), not your personal income. Typical maximum LTV is 65% to 75% (versus 80% for uninsured residential). Amortization: 20-25 years standard, or up to 50 years on CMHC MLI Select multifamily. Illustrative broker estimates of rates: roughly 4.50–7.00%, depending on asset class and LTV (illustrative, not a quote; see today’s residential rates for comparison).
How much down payment does a commercial mortgage need?
Plan for 25-35% down — conventional commercial caps at 65-75% LTV depending on asset class, tenancy, and location. Owner-occupied and well-tenanted multifamily get the higher leverage; specialty and single-tenant assets get less. CMHC MLI Select multifamily can stretch leverage well past conventional limits.
What is CMHC MLI Select?
CMHC's multifamily insurance product for 5+ unit residential. Stack energy + affordability + accessibility points to unlock up to 95% loan-to-value (or loan-to-cost on new construction) and up to 50-year amortization at 100 points (CMHC). For existing buildings, 50 points allows up to 85% LTV and 70+ points up to 95%; amortization is up to 40, 45 or 50 years at 50, 70 or 100 points. Confirm current CMHC requirements. See CMHC multiplex.
Do commercial mortgages have prepayment penalties?
Yes — typically larger and stricter than residential. Most commercial mortgages have full-term lock with significant penalties for breakage. Open commercial mortgages exist but at materially higher rates. Plan the term carefully — commercial isn't where you want to break early.
What is DSCR and why do commercial lenders care about it?
Debt Service Coverage Ratio (DSCR) = Net Operating Income ÷ Annual Mortgage Payment. It tells lenders how much cushion the property's income provides above the mortgage cost. A DSCR of 1.25 means the property earns 25% more than the payment. Most conventional commercial lenders require a minimum of 1.20–1.25.
How is a commercial mortgage different from a residential one?
Commercial lending qualifies on the property's cashflow (DSCR), not your personal income. Maximum LTV is typically 65–75% versus 80% for uninsured residential. Amortization is usually 20–25 years. Rates run wider and are quoted at terms of 5–10 years. Prepayment penalties are larger and stricter than residential.
Do you charge a fee to arrange a commercial mortgage?
$0 to you on many commercial files — lender-paid brokerage. On B-lender or private commercial files a brokerage fee may apply; always disclosed before you commit and never deducted without your written consent. FSRA #13737.
Words to know
Vendor take-backAmortizationPrivate mortgage
Related calculators & guides
Rental cashflowBusiness loanCMHC multiplexMortgage paymentRefinance
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