Canadian Real Estate Channel

Why Your Real Estate Deal Gets Approved… or Rejected

Finance Friday’s Josh and Aaron break down how internal credit teams evaluate commercial construction and multifamily loans in 2026, from the initial letter of intent to the final funding decision. They explain that today’s market is shaped by rising bond‑risk variables, expanding cap rates, and higher vacancy, prompting lenders to tighten credit standards and focus on granular borrower metrics. The video highlights that lenders now demand verified liquidity reserves, concrete proof of net worth, and a clean credit history. Experience on similar‑scale projects and disciplined cash‑flow management are weighted heavily, while reliance on home‑equity lines or land‑only net worth is viewed skeptically. Additionally, CMHC and other lenders are probing how many concurrent projects borrowers have, assessing overall portfolio debt service and rent‑growth assumptions. Key examples include the preference for cash‑on‑hand over borrowed equity, the practice of asking borrowers to disclose all active submissions, and the de‑valuation of land‑only assets to roughly 50 % of their book value. The hosts also note that mis‑managed construction budgets, not just lack of experience, are a leading cause of loan failures. For developers, the takeaway is clear: bolster liquid reserves, limit overlapping projects, and demonstrate a track record of successful, on‑budget builds. Lenders are tightening terms—potentially lowering loan‑to‑value ratios or raising rates—so financial discipline now directly impacts a deal’s approval odds.