Mortgage Options for Converted Properties in Ontario: Churches, Barns, Schools & Commercial Buildings
Hi, WealthTrack founder David Pipe here.
Fell in love with a converted church, old schoolhouse, or barn that's been transformed into a home? I completely understand the appeal. These properties have incredible character, soaring ceilings, unique architectural features, and often better value per square foot than traditional homes. There's something special about living in a piece of history that's been thoughtfully reimagined.
But here's what every buyer of converted properties discovers: getting a mortgage is brutally difficult. Your bank will probably say no. Traditional lenders see converted properties as "non-standard" or "high-risk." Even with perfect credit, a stable job, and a large down payment, you'll face rejection after rejection from lenders who won't even consider your application.
Why does this happen? Banks are fundamentally conservative institutions. They want cookie-cutter homes that are easy to appraise, easy to understand, and easy to resell if you default. A converted church or barn doesn't fit their lending criteria, no matter how beautiful, structurally sound, or well-renovated it is.
In this guide, I'll show you exactly how to finance converted properties in Ontario—which lenders will actually approve these mortgages, what documentation you need, the real costs involved, and the step-by-step process we use to get these "impossible" deals approved. I've personally helped dozens of buyers finance converted churches, barns, schools, fire halls, and commercial buildings across Ontario. These deals are absolutely possible—you just need to know the right path.
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Understanding Non-Traditional Property Conversions in Ontario
Before we dive into financing, let's clarify what we're talking about when we say "converted property." This isn't just a home with a nice renovation—we're talking about buildings that were originally constructed for completely different purposes.
Types of Converted Properties
The most common conversions we see in Ontario include:
Churches and chapels – By far the most common conversion, especially in smaller Ontario towns where churches are being decommissioned. These offer stunning high ceilings, beautiful windows, and open floor plans.
Barns and agricultural buildings – Growing trend in rural Ontario, particularly in Grey County, Prince Edward County, and the Kawarthas. Century barns are being transformed into spectacular homes.
Schools and fire halls – Often found in small towns across Ontario where these buildings are no longer needed for their original purpose. Solid construction, good bones, interesting layouts.
Commercial buildings – Former storefronts, offices, or mixed-use buildings converted to residential. Common in downtown cores of smaller cities.
Industrial buildings – Warehouses, factories, and mills turned into loft-style homes. Popular in cities like Hamilton, Kingston, and Ottawa.
Other unique conversions – We've seen gas stations, train stations, grain silos, and even water towers converted to homes.
What Makes Them "Converted"
For a property to be considered a conversion:
It was originally built for a non-residential purpose (worship, agriculture, commercial, industrial, institutional)
It's been legally rezoned from its original classification to residential use
It underwent significant renovation to become livable as a home
It now has all residential features: kitchen, bathrooms, bedrooms, proper heating
It retains some of its original character and unique features
Legal Status Matters Tremendously
This is critical: your converted property must be legally zoned residential and have all proper permits. This means:
The municipality has officially changed the zoning to residential (or mixed-use residential)
All conversion work was done with proper building permits
There's an occupancy permit confirming it meets current building code
The property is legally habitable under Ontario regulations
What we're not covering in this article: brand new construction, standard renovations to existing homes, commercial properties still being used commercially, or illegal conversions done without permits.
Key Takeaway: For financing purposes, your converted property must be legally zoned and permitted for residential use. No lender—not even alternative lenders—will finance an illegally converted property. If the seller can't produce zoning confirmation and permits, walk away.
Why Banks Reject Converted Properties
Let me be direct: you need to understand what you're up against. Traditional banks will reject your mortgage application for a converted property, and it has nothing to do with your creditworthiness. Here are the real reasons why:
Reason 1: Appraisal Challenges
Banks require appraisals to confirm the property is worth what you're paying. For standard homes, this is straightforward—appraisers find 3-5 comparable sales within a kilometer or two, adjust for differences, and arrive at a value.
For a converted church? How do you find comparable sales? There might be only one other converted church sale in the entire county in the past five years. Appraisers struggle with valuation methodology because these properties are, by definition, unique. Without reliable comparables, banks won't lend. The appraisal either comes in significantly lower than the purchase price (killing your deal), or the appraiser refuses to provide a value at all.
Reason 2: Resale Concerns
Banks always think about their worst-case scenario: you default, they foreclose, and they need to sell the property. With a converted property, they worry:
Smaller buyer pool (not everyone wants to live in a former church)
Longer time on market to find the right buyer
Potential difficulty selling at foreclosure auction
Unknown resale value in a distressed sale situation
Standard homes are liquid assets. Converted properties are specialty items. Banks hate specialty items because they're harder to liquidate quickly.
Reason 3: Insurance Issues
Here's something many buyers don't discover until it's too late: some insurance companies won't insure converted properties at all. Others will insure them but at premiums 30-50% higher than standard homes.
Why? Insurance companies worry about:
Unique construction methods that are expensive to repair
Hard-to-replace architectural features
Higher replacement costs for custom elements
Heritage designations that restrict repairs
Banks require proof of insurance before they'll fund your mortgage. If you can't get insurance, you can't get the mortgage. Period.
Reason 4: Perceived Maintenance and Operating Costs
Banks see higher risk in the operating costs of converted properties:
30-foot ceilings mean dramatically higher heating and cooling costs
Unique systems might require specialized contractors for repairs
Heritage designations may restrict renovations or require specific materials
Larger buildings mean more expensive maintenance
They view these ongoing costs as increasing your default risk, even if you have strong income and good credit.
Reason 5: Blanket Lending Policy Restrictions
Here's the most frustrating part: many banks have explicit internal policies that say "We do not lend on churches, barns, or commercial conversions." This isn't even a case-by-case assessment—it's a blanket prohibition.
Even if you work with a mortgage specialist at the bank, they cannot override this policy. The underwriter will decline your application based purely on property type, regardless of your financial strength.
A Real Example
Last year, I had a client with an 800 credit score, $200,000 down payment (30% of purchase price), and $150,000 annual income. He was rejected by TD, RBC, and Scotiabank for a beautifully renovated converted church in Prince Edward County. Not because of anything about him—purely because of the property type. The banks wouldn't even send an appraiser.
We got him approved through an alternative lender within three weeks.
Reality Check: You will be rejected by traditional banks. This isn't personal, and it doesn't mean your property is a bad investment. It just means you need different financing. Understanding this from the beginning saves you weeks of frustration.
Your Real Financing Options for Churches, Barns & Converted Buildings
Now for the good news: there are lenders who will finance converted properties. You just need to know where to look and what to expect. Let me walk you through your realistic options, tier by tier.
Tier 1: Monoline Lenders (Best First Stop)
Who they are: MCAP, First National, and RMG (in select cases)
These are mortgage-only lenders that work exclusively through brokers. They don't take deposits or have branches, so they focus purely on mortgages. Because they're more nimble than banks, some monolines will consider well-executed conversions.
What they require:
Property must be legally zoned residential with all documentation
Conversion must be 100% complete (not mid-renovation)
Property must be insurable with standard insurance
An appraisal must be possible, even if challenging
Typically want 20-25% down payment minimum
Pros:
Better interest rates than alternative lenders (6.5-8.5% range in 2026)
Standard amortizations up to 25 years
More professional process and documentation
Will consider properties that banks automatically reject
Cons:
Still quite selective—they don't approve all conversions
Require strong borrower profile (credit 680+, stable income)
Appraisal must support the purchase price
Each property is individually assessed by underwriting committee
Success rate: About 30-40% approval rate for well-converted properties with good buyers. Worth trying first because of the better rates, but don't count on it.
Tier 2: Credit Unions (Hit or Miss)
Who they are: Meridian, DUCA, Kindred, FirstOntario, and smaller regional credit unions across Ontario
Credit unions are member-owned financial cooperatives. They sometimes have more flexibility than banks, especially smaller community credit unions that understand local markets.
What they require:
Must be a member of the credit union (requires opening accounts)
Strong relationship with the credit union helps significantly
Property must be in their lending area
Generally want 15-20% down payment
Pros:
Sometimes more flexible than big banks on unique properties
Local credit unions understand local converted properties better (e.g., rural credit unions are familiar with barn conversions in their area)
Competitive interest rates if approved (5.5-7.5%)
Relationship-based lending—they know you as a person
Cons:
Each credit union has completely different policies
Many still won't lend on conversions despite being more flexible
Must be a member (takes time to establish relationship)
Geographic restrictions on where they lend
Success rate: Highly variable, roughly 20-30%. Rural credit unions tend to be better with barn conversions. Urban credit unions sometimes approve church/school conversions. It's very unpredictable.
Tier 3: Alternative Lenders (Most Reliable Path)
Who they are: Private institutional lenders, MICs (Mortgage Investment Corporations), and alternative mortgage companies
This is where most converted property financing actually happens. Alternative lenders specialize in properties and situations that traditional lenders won't touch.
What they require:
Property must be habitable and insurable (that's basically it for property requirements)
Legal residential zoning and permits
Minimum 20-35% down payment (most common is 25%)
Borrower must demonstrate ability to make payments
Focus on equity and exit strategy rather than property type
Pros:
Will approve what banks and monolines won't
Much faster approvals (1-2 weeks versus 4-6 weeks)
Less documentation required overall
Care about the property value and your equity, not the uniqueness
High approval rate for legal, insurable conversions
Cons:
Higher interest rates (typically 7.99-12.99% in 2026)
Shorter terms (usually 1-2 years, then you need to renew or refinance)
Lender fees of 1-4% of the mortgage amount
Higher down payment requirements
Success rate: 70-80% approval rate if the property is legal, completed, and insurable. This is your most reliable option.
Tier 4: Private Mortgages (Last Resort)
Who they are: Individual private investors and lending syndicates
Private lenders are individuals or groups who lend their own money, secured against your property. They're the most flexible option but also the most expensive.
What they require:
Sufficient equity in the property (they want 30-40% down minimum)
Proof you can make payments
That's essentially it—very few other requirements
Pros:
Will approve virtually any property type if there's sufficient equity
Extremely fast (can close in 7-10 days if needed)
Minimal documentation
Very flexible terms and conditions
Cons:
Highest interest rates (9-15%+ in 2026)
Shortest terms (typically 6 months to 1 year)
High fees: 2-5% lender fees plus broker fees
Requires substantial down payment (30-40%)
Success rate: 90%+ if you have the required equity. Private lenders will finance almost anything.
The Strategy That Actually Works: The Ladder Approach
Here's what successful converted property buyers actually do:
Step 1: Start with an alternative lender (Tier 3) at 8-11% interest Step 2: Get into the property and establish 12-24 months of perfect payment history Step 3: Refinance to a credit union or monoline lender (Tier 1-2) at a better rate Step 4: After several years with sales comparables established, might even qualify for traditional bank rates
Most converted property buyers don't get their dream rate on day one. They use alternative financing as an entry strategy, then refinance to better terms once they have payment history and the property has established value.
Think of it this way: Would you rather pay 10% for two years then refinance to 6%, or not buy your dream property at all? The higher rate is temporary if you plan it properly.
Comparison At a Glance
Lender Type | Interest Rate | Down Payment | Term Length | Approval Rate
Monolines | 6.5-8.5% | 20-25% | 25 years | 30-40% Credit Unions | 5.5-7.5% | 15-20% | 25 years | 20-30% Alternative | 8-13% | 20-35% | 1-2 years | 70-80% Private | 9-15%+ | 30-40% | 6-12 months | 90%+
Bottom line: Most of our converted property clients close with alternative lenders, then refinance within 18-24 months to better rates. This two-step approach is normal and expected for these properties.
Ready to explore your options? Book a free consultation and I'll tell you exactly which lenders might approve your specific converted property.
What Converted Property Financing Actually Costs
Let's talk real numbers. Financing a converted property costs more than financing a standard home—both upfront and monthly. You need to understand these costs before you fall in love with a property you can't afford.
Down Payment Requirements
Traditional home: You might put down 5-10% with mortgage insurance.
Converted property: Minimum 20%, more commonly 25-35%.
Why the difference?
Lenders need larger equity cushion to compensate for higher risk
Reduces their exposure if they ever need to sell the property
Proves your serious commitment to a unique property
Provides buffer for appraisal uncertainties
Real example:
$500,000 converted barn
Alternative lender requires 25% down = $125,000
Compare to regular home where you might do 10% = $50,000
You need an extra $75,000 just to get in the door
Interest Rate Reality
Let's be completely honest about rates:
2026 approximate rates:
Traditional bank for standard home: 4.89-5.49%
Monoline for converted property: 6.5-8.5%
Alternative lender: 8.99-12.99%
Private lender: 10-15%+
What this means for your monthly payment:
On a $400,000 mortgage, 25-year amortization:
At 5.5% (standard home): $2,448/month
At 8.5% (monoline): $3,139/month
At 11% (alternative): $3,867/month
That's a difference of $691 to $1,419 per month compared to standard financing. On a yearly basis, you're paying $8,300 to $17,000 more in interest.
Additional Upfront Costs
Beyond down payment and higher rates, budget for:
Lender fees: 1-4% of mortgage amount
On $400,000 mortgage = $4,000-$16,000
Alternative lenders typically charge 2%
Private lenders charge 3-5%
Specialized appraisal: $500-$1,000
May need appraiser experienced with unique properties
More time-consuming than standard appraisal
Insurance premiums: 30-50% higher than standard
Standard home: $1,500-$2,500/year
Converted property: $2,000-$4,000/year
Legal fees: $1,500-$2,500
Slightly higher due to more complex title searches and documentation
Property inspection: $800-$1,500
Requires inspector experienced with non-standard properties
More thorough inspection of unique systems
Total upfront costs example:
$500,000 converted church purchase:
Down payment (25%): $125,000
Lender fees (2%): $7,500
Appraisal: $800
Inspection: $1,200
Legal: $2,000
Insurance: $3,000/year
Closing adjustments: $3,000
Total cash needed: $142,500
The Refinancing Strategy
Here's the saving grace: you don't pay these higher rates forever.
Typical timeline:
Months 1-12: Pay 10% rate, establish perfect payment history
Months 12-24: Continue payments, property establishes value
Month 24: Refinance to credit union or monoline at 6-7%
Month 25 onward: Save $500-$800/month on lower rate
Over the first two years, you might pay an extra $20,000 in interest compared to standard rates. But then you refinance and save that much over the next 3-4 years. You're not losing money—you're paying for entry into a property you couldn't finance any other way.
Pro Tip: When budgeting, assume you'll pay the higher rate for 2 years, then refinance. Don't think of 11% as your forever rate—it's your entry rate. This mental shift makes the numbers much more manageable.
Essential Documentation and Requirements
Getting approved for a converted property mortgage requires more documentation than a standard home. Here's exactly what you need to have ready.
Critical Property Documentation
These are non-negotiable. Without these, no lender will approve:
1. Proof of legal residential zoning
Written confirmation from municipality that property is zoned residential
Can request this from the local planning department
Usually free or minimal cost ($50)
This is the #1 deal-killer if it's not properly zoned
2. Building permits for the conversion
Permits showing the conversion work was done legally
All major renovation permits (structural, electrical, plumbing, HVAC)
Some lenders want complete permit history
If seller can't provide these, request from municipality building department
3. Occupancy permit
Proves the conversion meets Ontario Building Code
Shows property is safe and legal for habitation
Issued after final inspection by municipal building inspector
Without this, property is not legally habitable
4. Current property survey
Shows building footprint, property lines, and any encroachments
Must be up-to-date (within last 10 years ideally)
Required by all lenders for title insurance
Cost: $1,000-$1,500 if you need to order a new one
5. Proof of insurability
Insurance quote or binder from reputable company
Many lenders require this before approval
If property is uninsurable, it's unfinanceable
Get quotes from multiple companies (some specialize in unique properties)
6. Professional appraisal (sometimes)
Some lenders order this themselves
Others want you to arrange it upfront
Must use appraiser experienced with unique properties
Cost: $500-$1,000
Your Personal Financial Documentation
Standard mortgage documentation, but often scrutinized more carefully:
Income verification: 2 years of tax returns (T1 Generals), recent pay stubs, letter of employment
Down payment proof: 90 days of bank statements showing source of funds
Credit report: Lender pulls this, but check yours first for errors
Assets and liabilities: Complete list of what you own and owe
Employment stability: 2+ years in same job or field preferred
Additional Documentation for Converted Properties
Because these are unique situations, lenders sometimes ask for:
Proof of renovation/maintenance experience: Shows you understand what you're buying
Energy efficiency report: Especially for large buildings with high ceilings
Detailed renovation history: What was done, when, and by whom
Heritage designation status: If applicable, full details of restrictions
Municipal compliance letter: Confirming no outstanding orders or violations
Timeline Considerations
Plan for a longer approval process:
Standard home purchase: 2-3 weeks for approval Converted property: 3-6 weeks minimum, often longer
Why it takes longer:
Waiting for municipal documentation (can take 2-3 weeks)
Finding appraiser willing to value unique property
Getting multiple insurance quotes
Lender internal committee reviews (alternative lenders often have committees that review unique properties weekly)
Additional due diligence on permits and zoning
Pro Tip: Start gathering property documentation before you even make an offer. Contact the municipality right away and request zoning confirmation and permit history. Having these ready can shave 2-3 weeks off your timeline. In competitive situations, being able to prove you've already confirmed zoning can make your offer more attractive to sellers.
How to Actually Get Your Converted Property Mortgage Approved
Let me walk you through the exact process, step by step, based on hundreds of converted property deals I've personally worked on.
Step 1: Pre-Qualification (Before You Start Looking)
Don't look at properties until you understand your financing reality.
What to do:
Meet with a mortgage broker experienced with converted properties (not all brokers are)
Discuss your financial situation honestly
Get realistic about down payment needs (20-35%)
Understand likely interest rates (8-13% initially)
Confirm you can handle higher monthly payments
Get pre-qualified so you know your price range
Why this matters: There's no point falling in love with a $700,000 converted church if you can only get approved for $500,000. Know your numbers first.
Step 2: Property Search with the Right Questions
When you're viewing converted properties, ask these critical questions:
To the seller or listing agent:
"Is this legally zoned residential?" (Request written municipal confirmation)
"Do you have all the original conversion permits?" (Ask to see copies)
"Is there an occupancy permit?" (This is essential)
"What insurance company currently covers this property?" (Confirms insurability)
"Have there been any mortgages on this since the conversion?" (Proves it's financeable)
Red flags to watch for:
Seller can't produce permits or is vague about them
Zoning is "pending" or "in process"
No insurance currently in place
Seller defensive or evasive about these questions
Recent work done without permits
If the seller can't clearly answer these questions with documentation, be very cautious. These are the deals that fall apart during financing.
Step 3: Make Your Offer with Proper Conditions
Converted properties need longer, more detailed conditions than standard homes:
Essential conditions:
Financing condition: 60-90 days (NOT 30-45 days like standard homes)
Inspection condition: 14 days (need time to find specialized inspector)
Confirmation of legal zoning: 14 days
Proof of insurability: 14 days
Review of all permits and occupancy permit: 7 days
Why longer conditions?
You need time to:
Get written municipal confirmation of zoning
Find a lender (might need to approach multiple lenders)
Get specialized appraisal completed
Secure insurance quotes from multiple companies
Review all permits thoroughly
Complete detailed inspection
Don't let sellers or their agents pressure you into shorter conditions. These deals are complex and need proper due diligence time.
Step 4: Immediately Start the Lending Process
The moment your offer is accepted:
Day 1:
Contact your mortgage broker
Provide all your financial documents
Give broker all property documents you currently have
Broker begins submitting to appropriate lenders
Days 2-7:
Contact municipality planning department for zoning confirmation
Request building permit copies from seller or municipality
Order property survey if not already provided
Start getting insurance quotes from multiple companies
Days 8-14:
Complete property inspection with specialized inspector
Lender orders appraisal (if not done already)
Continue gathering any missing documentation
Follow up on municipal requests
Days 15-30:
Appraisal completed and reviewed
Insurance secured with written binder
Lender reviews complete file
Additional questions or documentation requests addressed
Days 30-45:
Lender approval received
Review and sign mortgage commitment
Lawyer begins closing process
Conditions removed from purchase agreement
Days 45-60:
Final walk-through of property
Lawyer completes due diligence and title search
Closing day: keys are yours!
Step 5: Post-Approval - Setting Up for Refinance
Once you've closed, immediately start planning for your refinance:
Your refinancing strategy:
Make every single payment on time (set up automatic payments)
Keep property in excellent condition
Document any improvements you make
Save receipts for all maintenance and upgrades
After 12-24 months, contact your broker about refinancing options
Why refinancing matters:
With 1-2 years of perfect payment history:
You become much more attractive to monolines and credit unions
Your property now has a recent sale comparable (yours!)
You can potentially reduce your rate by 3-5%
Save $500-$1,000+ per month on mortgage payments
Most buyers of converted properties refinance within 2 years. Your initial higher rate is temporary if you plan it properly.
Real Examples of Converted Property Financing in Ontario
Let me share three actual deals from the past two years. Names are changed, but all numbers are real.
Example 1: Converted Methodist Church in Prince Edward County
The property: Beautiful 1880s church converted to a stunning 3-bedroom home, purchased for $575,000
The buyers: Professional couple, combined income $135,000, credit scores 720/740, no debt
The challenge:
Rejected by RBC, TD, and BMO (all had policies against churches)
Only one comparable church sale in the county in the past 5 years
Required specialized insurance due to stained glass windows and heritage features
Large open space with 25-foot ceilings raised heating cost concerns
The solution:
Alternative lender approval (institutional alternative lender specializing in unique properties)
25% down payment required ($143,750)
Interest rate: 9.49%, 2-year term
Lender fee: 2% ($10,750)
Required energy audit to address heating cost concerns
The outcome:
Deal closed in 52 days from offer acceptance
Monthly mortgage payment: $4,100
Property taxes: $450/month
Insurance: $320/month (higher than standard)
Total monthly housing cost: $4,870
After 18 months: Refinanced with local credit union at 6.89%
New monthly payment: $3,450 (saving $650/month)
Saved $11,700 in the first 18 months after refinancing
The buyers love their unique home and tell me the higher initial payments were worth it to live in such a special property.
Example 2: Converted Dairy Barn in Grey County
The property: 1920s stone dairy barn professionally converted to a 4-bedroom country home, $650,000
The buyer: Single professional, income $95,000, credit score 680, first-time homebuyer
The challenge:
Property classified as "specialty/unique" by all traditional lenders
On well and septic (not city services)
Large open-concept space with 30-foot ceilings
Difficult appraisal due to unique features and limited comparables
Rural location 25km from nearest town
The solution:
Found monoline lender willing to consider it (took three attempts with different monolines)
30% down payment required ($195,000 - buyer had significant savings)
Interest rate: 7.99%, 2-year term
Required detailed energy audit showing insulation and heating efficiency
Needed proof of well and septic system compliance
The outcome:
Closed in 41 days
Monthly payment: $3,890
Higher utilities but offset by no property tax (farm tax rate)
Buyer lived there happily for 2 years
After 2 years: Refinanced with same monoline lender at 6.49%
Property had appreciated to $725,000 (more equity)
New payment: $3,150 (saving $740/month)
The property is now easier to finance because it serves as its own comparable sale
Example 3: Converted Elementary School in Small-Town Ontario
The property: 1950s brick elementary school converted to unique single-family home, $425,000
The buyers: Young family with two kids, household income $110,000, credit scores 750+
The challenge:
Perfect buyers financially, but property type was the issue
Local credit union declined despite buyers being long-time members
Monoline lenders said appraisal would be too difficult
School gymnasium converted to living space with 20-foot ceilings
Playground still on property (needed to be removed as condition)
The solution:
Alternative lender specializing in rural and unique properties
20% down payment ($85,000)
Interest rate: 10.99%, 1-year term
Required proof of insurance upfront before approval
Playground removal completed before closing
The outcome:
Higher rate but got their dream family home
Monthly payment: $4,150 (tight but manageable)
Kids love living in a "school"
Neighborhood curiosity turned into appreciation
After 12 months: Refinanced with the same credit union that initially declined them
Credit union reconsidered once property had recent sale comparable
New rate: 6.29%
New payment: $2,650 (saving $1,500/month!)
Now saving over $18,000/year compared to initial rate
The pattern: Notice all three examples refinanced to significantly better rates within 1-2 years. This is the normal path for converted properties. You start higher, establish payment history and property value, then refinance to better terms.
The initial higher rate isn't forever—it's your entry fee to own something truly special.
Don't Make These Costly Mistakes
After helping dozens of buyers through this process, I've seen the same mistakes repeatedly. Here's how to avoid them:
Mistake 1: Assuming You Can Get a Normal Mortgage
The error: Making offers with 30-day financing conditions and planning for 10% down payment
The reality: You need 60-90 day conditions and 20-35% down
How to avoid it: Get pre-qualified with a broker who specializes in converted properties BEFORE you start looking. Know your real requirements upfront.
Mistake 2: Not Verifying Legal Residential Zoning First
The error: Falling in love with a property, making an offer, then discovering it's not actually zoned residential
The reality: No lender will finance a property without legal residential zoning, period
The cost: We've seen buyers lose $10,000-$25,000 deposits when deals fall through due to zoning issues
How to avoid it: Before making any offer, call the municipality planning department and ask: "Can you confirm in writing that [address] is zoned residential?" Do this BEFORE you emotionally commit.
Mistake 3: Buying Mid-Conversion or Incomplete Projects
The error: Thinking you can get a mortgage on a barn that's 60% converted
The reality: Lenders want completed conversions with full occupancy permits
Why this fails: Banks and even alternative lenders won't finance construction or incomplete conversions unless you're using a construction mortgage (different product, different rules)
How to avoid it: Only consider properties with:
Complete conversion finished
Full occupancy permit issued
All final inspections passed
Property currently habitable
Leave the renovation projects to cash buyers or construction loan specialists.
Mistake 4: Not Confirming Insurability Early
The error: Assuming any property can be insured
The reality: Some converted properties are genuinely uninsurable
Certain heritage restrictions make repairs impossible
Remote locations without fire protection
Unconventional systems insurance companies won't cover
Buildings with significant deferred maintenance
How it kills deals: If you can't insure it, you can't finance it
How to avoid it: Get insurance quotes as part of your condition period, before you waive conditions. Contact 3-4 insurance brokers and ask specifically about converted properties. If two or more say they can't insure it, that's a red flag.
Mistake 5: Giving Up After Bank Rejections
The error: Getting declined by TD and RBC, then thinking "I guess I can't afford this"
The reality: Bank rejections are completely normal and expected for converted properties
What actually happens: Alternative lenders will approve what banks reject
How to avoid it: Start with a mortgage broker from day one. Don't waste weeks going to banks who will automatically say no. Brokers know which lenders approve converted properties and can get you to the right lender immediately.
I've had clients come to me after getting declined by four banks, feeling defeated. We got them approved with an alternative lender in two weeks. The banks were never going to approve—it was wasted effort from the start.
Getting Your Converted Property Insured
Insurance deserves its own section because it's often the overlooked deal-killer. You cannot get a mortgage without insurance, so this matters tremendously.
Why Insurance Is Challenging
Insurance companies see converted properties as higher risk:
Unique features are expensive to replace (stained glass, timber beams, custom metalwork)
Some materials or methods can't be replicated today
Larger buildings cost more to repair
Heritage designations may restrict repair methods
Unconventional systems (geothermal, solar, etc.) require specialized coverage
Insurance Companies That Cover Unique Properties
Not all insurance companies will insure converted properties, but these often will:
Specialty insurers:
Echelon Insurance – specializes in unique and heritage properties
Perth Insurance – covers unique risks
Wawanesa – sometimes covers conversions
High-value home insurers – Frank Cowan, Aon, Chubb (for higher-value properties)
Strategy: Work with an insurance broker (not a single-company agent). Brokers have access to multiple companies and know which ones handle converted properties.
What Insurers Want to Know
Be prepared to provide:
Age of building: Original construction date
Age of conversion: When the conversion was completed
All updated systems: Electrical upgraded to current code, modern plumbing, new heating system
Roof condition: Age, material, condition
Fire protection: Distance to fire hydrant, distance to fire station
Security systems: Alarm, monitoring, fire suppression
Heritage status: If designated, full details
Cost Reality
Expect significantly higher premiums:
Standard home insurance: $1,500-$2,500/year Converted property insurance: $2,500-$4,500/year
That's 30-50% higher premiums, sometimes more for very unique properties.
Higher deductibles: Often $2,500-$5,000 instead of $1,000-$2,000
Why? Insurance companies price for risk and replacement cost. Unique properties cost more to insure because they cost more to fix.
Critical tip: Get insurance quotes BEFORE you firm up your purchase. If three insurance companies decline to quote, or if premiums are $6,000+/year and you can't afford that, you need to know before you're locked into the purchase.
Your Path to Financing That Converted Property
Let me bring this all together for you.
Traditional banks will reject converted properties—that's the reality, and it's not going to change. These properties don't fit their lending criteria, their risk models, or their policies. Even with perfect credit, strong income, and a large down payment, you'll face rejection after rejection from TD, RBC, BMO, Scotiabank, and CIBC.
But here's what matters: you don't need a traditional bank. Alternative lenders exist specifically for properties like yours. They understand unique properties, they know how to value them, and they're willing to take on what banks consider "non-standard." You'll pay more initially—expect rates of 8-13% versus 5-6% for standard properties. You'll need a larger down payment—typically 25% instead of 5-10%. And you'll have higher upfront costs with lender fees and specialized insurance.
None of this means your dream property is out of reach. It just means you need a different strategy.
The winning approach is the two-step ladder strategy: Start with alternative financing at 8-12%, establish 12-24 months of perfect payment history while your property establishes its value, then refinance to a monoline lender or credit union at 6-8%. Over time, you work your way down to better rates. You're not stuck with the higher rate forever—it's your entry strategy.
Hundreds of Ontarians are living in converted churches, barns, schools, fire halls, and commercial buildings right now. They all took this same path. The financing seemed impossible at first, but with the right guidance and the right lenders, it absolutely worked.
That converted church with the soaring ceilings, the barn with hand-hewn beams, the schoolhouse with incredible character—these properties aren't out of reach. You just can't use the same financing approach as someone buying a standard subdivision home.
Interested in a converted property but being told it's impossible to finance?
Let's talk. I've successfully financed dozens of churches, barns, schools, and commercial conversions across Ontario. I know exactly which lenders approve these properties, what documentation they need, and how to structure deals for approval.
Book a free consultation and I'll review your specific property and situation. I'll tell you honestly if it's financeable, which lenders would consider it, what rate and down payment to expect, and the exact path to getting approved.
Your dream converted property is waiting. Let's figure out how to finance it.
This guide provides general information about mortgage financing for converted properties in Ontario as of 2026. Rates, programs, and lender policies change regularly. Always consult with a licensed mortgage professional for advice specific to your situation and property.
