Everything you need to know about the CMHC MLI Select program.
1. What is the CMHC MLI Select Program?
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The CMHC MLI (Multi-Unit Mortgage Loan Insurance) Select Program is a flexible mortgage insurance product designed to support the development, refinancing, and acquisition of multi-unit residential properties. The program offers favorable loan terms and insurance benefits for properties that contribute to affordable housing, energy efficiency, and accessibility.
2. Who is eligible for CMHC MLI Select?
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Eligibility is open to Canadian borrowers, including developers, real estate investors, and property managers looking to finance multi-unit residential properties with five or more units. Applicants must meet specific criteria related to affordability, energy efficiency, and accessibility.
3. What are the key benefits of CMHC MLI Select?
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Key benefits include: Higher Loan-to-Value Ratios up to 95% LTV for affordable housing properties; reduced insurance premiums based on meeting affordability, energy efficiency, or accessibility standards; extended amortization up to 50 years; and a streamlined approval process with faster processing times.
4. How does the program support affordable housing?
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The program incentivizes investments in affordable housing by offering lower insurance premiums and higher LTV ratios for properties that maintain below-market rents for a portion of their units. Investors can access more favorable financing by contributing to long-term housing affordability.
5. What qualifies as an energy-efficient property?
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Properties must meet energy efficiency standards through energy-saving renovations or new construction that reduces energy consumption. Projects achieving a 15% or greater improvement over provincial energy codes may be eligible for better terms and premium discounts.
6. Can I refinance a property with CMHC MLI Select?
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Yes. Refinancing can be used to free up capital for reinvestment or for upgrading the property to meet energy efficiency and accessibility standards, which may make it eligible for additional benefits.
7. What is the maximum loan-to-value ratio?
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The maximum LTV varies by eligibility criteria. In some cases—particularly for properties meeting affordability, energy efficiency, and accessibility standards—you can qualify for up to 95% LTV, minimizing your out-of-pocket investment.
8. Is there a limit on the number of units that can be insured?
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There is no strict upper limit, but the property must have at least five units to qualify as a multi-unit residential property. Larger developments may receive additional benefits depending on how well they meet the program's criteria.
9. What does it cost to apply for CMHC MLI Select?
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The cost of the MLI application is $200 per door. For a detailed breakdown of all costs associated with purchasing multifamily properties, ask Jeff for the CMHC MLI Program Cost Breakdown.
10. Can CMHC MLI Select be used for new construction?
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Yes. CMHC MLI Select can be applied to both new construction projects and the acquisition or refinancing of existing multi-unit properties. New projects incorporating affordable housing, energy efficiency, or accessibility features are especially well-suited.
11. How does CMHC MLI Select help investors move from retail to wholesale investing?
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It allows investors to access 'wholesale-level' real estate by offering favorable financing for large multi-unit properties. Higher LTV ratios, longer amortization periods, and lower insurance premiums create a path to greater wealth accumulation through scale that retail single-family investing can't match.
12. What are the recent updates to CMHC amortization terms?
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CMHC increased the mortgage inclusion rate to allow loans up to $1.5M with amortizations extended to 30 years. They also expanded access for smaller multi-unit properties (3- and 4-plexes) to 90% loans with 30-year amortizations, broadening financing flexibility.
13. How does the 95% loan-to-cost feature work?
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Qualifying projects can receive up to 95% financing of total project costs — including architectural fees, legal costs, and development charges. You only need to cover 5% of the total project cost out of pocket, making it a highly capital-efficient structure.
14. What are the key incentives for achieving 100 points in MLI Select?
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Projects scoring 100 points across affordability, accessibility, and energy efficiency access the best terms: lower insurance premiums, up to 95% loan-to-cost coverage, and amortizations up to 50 years — significantly lowering monthly payments and improving day-one cash flow.
15. What does CMHC consider 'affordable housing'?
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CMHC defines affordability based on benchmark rents for specific areas — not low-income or government-subsidized housing. Units rented at or below the area's benchmark affordable rent qualify. Only a portion (as low as 10%) of units may need to meet this criteria.
16. What is limited recourse financing?
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Unlike traditional mortgages where the borrower is personally liable for the entire loan, limited recourse means the lender cannot pursue the borrower beyond a defined portion of the loan in default. This reduces personal risk when taking on large multi-unit projects.
17. How does CMHC MLI Select make a project cash flow positive?
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Extended amortization periods up to 50 years dramatically reduce monthly debt service payments, allowing many projects to achieve positive cash flow from day one. Combined with high loan-to-cost ratios, this maximizes profitability.
18. Does CMHC MLI Select require all units to be affordable?
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No. As little as 10% of the units may need to meet the area's benchmark affordable rent. This flexibility allows developers to maintain profitability across the remaining units while still qualifying for program benefits.
19. Can additional charges be applied to affordable units?
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Yes. While the unit rents at a lower price point, you can charge separately for parking, storage lockers, or other extras. The affordability criteria applies to the unit rent only, not additional services.
20. How does the accessibility requirement work?
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Meeting accessibility requirements is generally straightforward since most building codes already mandate barrier-free units. Including these units rarely adds significant cost and helps earn points toward better financing terms.
21. Can individuals with low income or poor credit qualify?
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CMHC focuses primarily on the building's financials rather than personal income or credit. You generally need to provide the required deposit and meet net worth and liquidity requirements. However, individuals with credit below 630 may face eligibility challenges.
22. What is Peripassu and how does it benefit investors?
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Peripassu allows for second mortgages on a project. Once the building is stabilized, you can pull out up to 95% of the loan-to-value. This lets investors access more capital as the building appreciates and redeploy that capital into new investments.
23. How long will CMHC support this program?
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The program offers a guaranteed certificate for 50 years. However, the government may discontinue the program for future projects, so current market timing is advantageous for investors looking to participate.
24. When do payments begin — during construction or after?
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For a draw loan, payments begin once construction is completed. For a completion loan, payments begin at closing. The structure depends on the specific lending arrangement — ask Jeff to walk you through the options.
25. How are rental rates decided?
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Rental rates are set based on third-party appraisals and market analyses conducted by the underwriting team, ensuring rates align with current market conditions for the specific area.
26. How does GST work for pre-build CMHC products?
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The Government of Canada provides a 100% rebate of the GST (or federal portion of HST) on new purpose-built rental housing. This applies to new apartment buildings, student housing, and seniors' residences designed for long-term rental. Note: there is no HST in Alberta.
27. CRA is saying my property doesn't qualify for the GST rebate — what do I do?
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The GST rebate applies to any new purpose-built rental complex with four or more units. The CRA website lists exclusions for detached homes, duplexes, and triplexes — but those exclusions only apply when the property has fewer than four units. When contacting CRA, describe the property as '# of units on a single title, purpose-built for rental' to avoid miscommunication.
28. What is the significance of building smaller units for affordability?
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Smaller units like studios or basement apartments often qualify as 'affordable' under CMHC criteria, which is based on benchmark rents — not unit size or tenant income. These are still rented on the open market, and you can still select tenants based on applications.
29. How does CMHC ensure a project's financial viability?
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CMHC conducts its own thorough analysis including a Debt Service Coverage Ratio (DSCR) requirement of at least 110%. This means rental income must cover at least 110% of the building's costs before any loan is granted.
30. Why aren't more small investors using this program?
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Building construction is complex and demanding. Most investors prefer the relative simplicity of being a landlord over managing construction. Large developers tend to dominate because they have the resources and expertise — which is exactly why partnering with an experienced broker who knows this program is so valuable.
31. What are the benefits of investing in energy-efficient building design?
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Energy-efficient designs reduce long-term utility costs and increase resale or refinancing value. Local municipalities may also offer incentives for installing high-efficiency systems, further offsetting costs and improving returns.
32. What are the key financing terms available?
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CMHC MLI Select offers below-prime interest rates, up to 95% loan-to-cost financing, and fixed-rate mortgages with up to 10-year terms — far more favorable than traditional construction financing, making it easier to secure stable, long-term rental returns.
