No. While conventional financing guidelines often cite 25% and CMHC programs like MLI Select allow as little as 5%, your actual required down payment is driven by the Debt Coverage Ratio. The property's Net Operating Income must support the mortgage payment at the lender's minimum DCR threshold, which may require you to put down more than the program minimums.
DCR is calculated by dividing the building's Net Operating Income by the annual mortgage payment for the loan amount you are requesting. Lenders use this ratio to determine whether the property generates sufficient income to cover the debt service.
Seller-provided statements or MLS listings sometimes show zero for expenses like property management because the current owner self-manages. Lenders require you to account for realistic expenses including property management, so you must adjust the numbers to reflect lender underwriting standards rather than accepting the seller's figures at face value.
Yes, a few lenders will provide residential financing on five and six-unit properties, allowing you to qualify personally for up to 80% loan-to-value with a 30-year amortization and residential interest rates. This approach can save thousands of dollars by avoiding commercial appraisal fees, environmental assessments, building condition reports, and additional lender or broker fees.
