Canadian Real Estate Channel

Why Financing Is Getting Harder in 2026… (And No One’s Talking About It)

The video explains why financing new‑construction and repositioning projects is becoming increasingly difficult in 2026. A broad rental‑rate decline from the 2021‑2022 peak has pushed vacancy rates higher across Canada, especially in markets like Edmonton, forcing lenders to reassess loan sizing and underwriting criteria. Developers are now facing tighter loan‑to‑cost ratios, higher equity contributions, and additional capital reserves. Lenders are cutting projected rents in their internal models, which reduces as‑complete values and triggers larger insurance premiums and potential hold‑backs. Shorter build cycles can mitigate exposure, but larger projects still carry significant market‑risk over 18‑24 months. A concrete example cited is an Edmonton multifamily project where the lender reduced the loan‑to‑cost from 75% to 68% after accounting for rental softening, adding roughly $200,000 to the developer’s equity requirement. Lenders also rely on their own rental data rather than appraiser opinions, and CMHC‑backed financing is becoming more conservative, especially among credit unions. The takeaway for investors and developers is to adopt more conservative rent assumptions, increase cash buffers, and expect higher upfront equity. While tighter financing raises short‑term costs, the current market correction also creates buying opportunities in existing assets as cap rates expand and valuations normalize.