Youssef KobbiCMHC vs Bridge Loans in Commercial Real Estate: Which One Requires Better Credit?
When investing in commercial real estate (CRE) whether it’s an apartment complex, student housing, or senior living community choosing the right financing product is crucial. Two of the most commonly used financing options in Canada for multifamily and income-producing CRE are CMHC-insured loans and bridge loans.
These loans serve very different purposes: CMHC offers long-term, cost-efficient financing for stabilized assets, while bridge loans are short-term solutions for transitional or opportunistic deals. But which one requires better credit? And which is the best fit for your next acquisition or refinance?
This guide provides a detailed comparison of both products in the context of commercial real estate breaking down credit requirements, deal suitability, timelines, and real-world examples.
What Are CMHC-Insured Loans in Commercial Real Estate?
The Canada Mortgage and Housing Corporation (CMHC) provides mortgage loan insurance to lenders financing eligible residential income properties. For CRE investors, this applies primarily to:
- Purpose-built rental apartment buildings (5+ units)
- Mixed-use properties (with at least 50% residential space)
- Senior housing or student accommodations (under specific conditions)
When a lender issues a loan insured by CMHC, it’s protected against borrower default. This reduces risk and allows for lower interest rates, longer amortization periods (up to 50 years), and high loan-to-value (LTV) ratios often up to 95% for standard rental housing and even higher under affordable housing programs.
CMHC Loan Requirements for CRE
While the benefits are significant, CMHC underwriting is conservative and detailed. Borrowers must demonstrate long-term viability and financial strength.
Key Requirements:
- Minimum credit score: Typically 600 or higher for individuals or principals
- Strong net worth and liquidity: At least 25% of the loan amount being requested, with 1.1x–1.5x debt coverage in liquidity
- Experienced management team or track record in CRE
- Stabilized property with sufficient DSCR (Debt Service Coverage Ratio)
- Environmental and building condition reports
- Detailed business plan (especially for new construction or affordable housing)
Who Is CMHC Best For?
- Long-term investors in stabilized rental properties
- Developers seeking take-out financing after construction
- Institutional or seasoned CRE owners with clean credit and financial depth
CMHC loans are best when you want low-cost, permanent debt and are willing to invest time in a rigorous application process that can take 3–6 months.
What Are Bridge Loans in Commercial Real Estate?
Bridge loans are short-term financing solutions used to “bridge” a gap, typically between acquisition and permanent financing, or during a repositioning or value-add phase.
These loans are interest-only, have terms of 6 to 24 months, and are funded by banks, MICs (Mortgage Investment Corporations), or private lenders. While more expensive than CMHC loans, bridge loans offer speed and flexibility, allowing investors to act quickly in competitive or distressed scenarios.
Bridge Loan Requirements for CRE
Because bridge lenders are taking on more risk, they focus more on the underlying asset and exit strategy than your personal credit. However, creditworthiness still plays a role in pricing and conditions.
Typical Requirements:
- Minimum credit score: Often 640+, but flexible depending on the deal
- Detailed exit plan (sale, refinance with CMHC, stabilization, etc.)
- Upfront fees and higher interest rates (8–12%+ common)
- Loan-to-cost (LTC) ratios of 70–85%
- Asset-focused underwriting, especially for transitional or underperforming properties
Who Are Bridge Loans Best For?
- Investors acquiring underperforming or distressed CRE assets
- Developers awaiting CMHC approval or building stabilization
- Buyers needing fast closings or capital to execute capex plans
- Borrowers with short-term credit or liquidity issues
Bridge financing is a tool not a destination. It enables value creation, but it’s expensive and should be used as part of a clear financing roadmap.
Side-by-Side Comparison: CMHC vs Bridge Loans
| Criteria | CMHC Loan | Bridge Loan |
| Credit Score Requirement | 680+ (strict) | 640+ (flexible) |
| Loan Term | 5–50 years | 6–24 months |
| Interest Rate | ~3–5% (as of 2025) | ~8–12%+ |
| Loan-to-Value | Up to 85% (95% for affordable) | 70–85% of cost |
| Amortization | Up to 50 years | Interest-only |
| Speed of Execution | 3–6 months | 2–4 weeks |
| Best Use Case | Stabilized income-producing properties | Value-add, repositioning, fast acquisition |
| Underwriting Focus | Borrower + Asset | Exit + Asset |
| Exit Strategy Required? | No (permanent financing) | Yes (sale or refinance) |
Real-World Example: How This Plays Out
Scenario A – CMHC Deal
A developer owns a 30-unit stabilized apartment building in Calgary. It’s fully leased with a 1.30x DSCR. They want to refinance to pull equity and secure long-term, low-cost debt.
CMHC is the perfect fit.
With a credit score of 720, solid financials, and experience in multifamily, they secure an 85% LTV loan with a 40-year amortization at 4.2%.
Scenario B – Bridge Deal
A syndicate investor identifies a 24-unit asset in Edmonton listed at a discount. It’s 60% occupied, with deferred maintenance but strong upside. They need to close in 21 days.
CMHC is not an option (property isn’t stabilized).
They secure a 12-month bridge loan at 10% interest, renovate and stabilize the asset, and later refinance with a CMHC-insured mortgage after 10 months.
Which Option Requires Better Credit?
In CRE, CMHC financing has much higher credit standards than bridge loans. Not only do you need a better personal credit score, but also:
- Better liquidity
- Stronger net worth
- Solid track record and operating experience
Bridge loans are more asset-based and suited to those building experience, tackling turnaround projects, or facing short-term financial constraints.
Meanwhile, Altus Group notes that bridge lending is increasingly used as a strategic tool to facilitate acquisitions in today’s competitive CRE landscape.
How Smart Capital Can Help You Choose the Right Path
At Smart Capital, we help CRE investors and developers across Canada navigate complex financing decisions from acquisition to refinance to portfolio growth.
Here’s how we help:
🔍 We Clarify Your Financing Strategy
We start by analyzing your asset, credit profile, exit plan, and growth objectives. Whether you’re eyeing a stabilized 15-unit property in a major city or planning a value-add repositioning in a growing secondary market, opportunities abound across Canada, we match the right loan type to your situation.
🧠 CMHC Expertise
Smart Capital works with CMHC-approved lenders and underwriters. We help you:
- Determine eligibility
- Optimize your loan structure (term, amortization, LTV)
- Prepare a winning package (financials, reports, business plan)
- Navigate timelines and document requirements
Bridge Financing, Fast
Need a fast close or interim funding before CMHC approval? We provide:
- Access to a network of bridge lenders
- Support for exit planning and refinance scenarios
- Tailored financing structures based on your strategy
We’ve Funded Over $64M in CRE Projects
From apartment acquisitions to JV developments, we’ve helped investors structure deals with:
- CMHC-insured loans
- Bridge and mezzanine debt
- Equity partnerships
We don’t just broker capital, we help align financing with your long-term vision.
📩 Book a call today to assess your next deal.
Final Thoughts
Both CMHC and bridge loans serve vital roles in commercial real estate. The right choice depends on your:
- Credit profile
- Business plan
- Timeline
- Asset condition
CMHC is for the long game.
Bridge is for the right-now.
But no matter your stage, first acquisition or scaling portfolio, Smart Capital is here to guide you through the maze of CRE financing with the strategy and relationships to get deals done.
Conclusion
Choosing between a CMHC-insured loan and a bridge loan in commercial real estate isn’t about which is better, it’s about which is right for your project’s lifecycle and your financial profile.
- If you have a stabilized income-producing property, strong credit, and want long-term, low-cost financing, CMHC is unmatched in its affordability and structure.
- If you’re acquiring a property quickly, tackling a value-add strategy, or waiting for your project to stabilize, bridge loans offer the agility needed to move fast and unlock upside.
Your credit score matters more in CMHC deals, where underwriting is conservative and long-term. Bridge lenders are more flexible but come at a higher cost and require a solid exit strategy.
Ultimately, both are tools in a smart CRE investor’s toolbox. And when used strategically sometimes even together, they can help you build, scale, and optimize your real estate portfolio.
Frequently Asked Questions (FAQ)
❓1. Can I use a bridge loan to acquire a property and then refinance with CMHC later?
Yes. This is a common strategy. Investors often use bridge loans to acquire, renovate, and stabilize a property, and then refinance with CMHC once the asset meets their criteria (e.g. minimum DSCR, occupancy levels). This allows you to unlock long-term value even if the property doesn’t initially qualify for CMHC.
❓2. What’s the minimum credit score for a CMHC loan in commercial real estate?
While no exact score is published, CMHC-approved lenders typically expect a minimum personal credit score of 680 for borrowers or principals, along with proven financial capacity and experience. For institutional borrowers or LP-GP structures, the credit profile of key principals still matters.
❓3. Are CMHC loans only for residential buildings?
No, but the building must be primarily residential. CMHC loans apply to commercial real estate that is multi-residential in nature: apartment buildings, senior housing, student housing, and mixed-use buildings with more than 50% residential square footage. Purely commercial assets (e.g., retail plazas or office towers) are not eligible.
❓4. How fast can I close with a bridge loan?
Bridge loans can close in as little as 10–21 business days, depending on lender, due diligence, and documentation. This makes them ideal for quick acquisitions, especially in competitive or distressed sales where speed is critical.
❓5. Does Smart Capital help with CMHC applications?
Absolutely. We work with multiple CMHC-approved lenders and help you structure, prepare, and present your application package—financials, reports, business plans, and more. We also advise on repositioning projects so that your asset can qualify for CMHC refinancing down the road.
❓6. What if my credit is below 680 can I still invest in CRE?
Yes, but your financing options may be more limited. Bridge loans or B-lender products may be available depending on the asset and your business plan. At Smart Capital, we assess the full picture, including your partners, the asset’s potential, and your strategy to help structure a viable solution.
📩 Still unsure which path is right for your project? Book a free consultation with Smart Capital today.
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