# What are the key differences between residential and commercial mortgage underwriting?

> The key difference lies in the risk assessment approach.

Category: Investor
Last verified: 2026-02-18
Source: https://ratellow.com/faqs/investor/what-are-the-key-differences-between-residential-and-commercial-mortgage-underwriting

## Answer
| Factor              | Residential Mortgage | Commercial Mortgage |
|----------------------|----------------------|-----------------------|
| Primary Focus       | Borrower's Repayment Ability | Property's Cash Flow |
| Key Metric          | Credit Score, Income   | Debt Service Coverage Ratio (DSCR) |
| Underwriting Guide | Guideline B-20       | CAR (Capital Adequacy Requirements) |

## Institutional highlights
- When you get a home loan, lenders focus on your ability to repay it.
- For larger apartment building loans, lenders really look at how much income the property itself generates.
- Banks need to hold a certain amount of money to cover the risk of your mortgage.
- If you have a smaller down payment, mortgage insurance protects the lender if you can't pay your mortgage.
- Smaller banks might have simpler ways to evaluate loans for commercial properties.

## Related guide
- https://ratellow.com/guides/commercial-residential-investors

## Sources
- I. Purpose and scope of the guideline — https://www.osfi-bsif.gc.ca/en/guidance/guidance-library/residential-mortgage-underwriting-practices-procedures-guideline-2017#1.0
- Chapter 6 – Securitization — https://www.osfi-bsif.gc.ca/en/guidance/guidance-library/capital-adequacy-requirements-car-2026-chapter-6-securitization#toc-id-0
- Disclosure requirements — https://www.osfi-bsif.gc.ca/en/guidance/guidance-library/residential-mortgage-underwriting-practices-procedures-guideline-2017#3.1