Hafeez Imran

Hafeez Imran

Broker

Bay Street Group Inc., Brokerage*

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CMHC MLI Select

Maximize Your Multi-Unit Investments with CMHC Financing

Investing in multi-unit properties is a game-changing strategy for building wealth. The Canada Mortgage and Housing Corporation (CMHC) offers two robust programs for financing: the MLI Select Program and the Standard Rental Housing Program. Whether you're focused on affordable housing or flexibility in rental markets, CMHC has you covered.

Quick Facts:

  • CMHC MLI Select Program: Up to 95% financing and 50-year amortization for properties meeting affordability, energy efficiency, or accessibility standards.
  • CMHC Standard Program: Flexible terms for resale or construction with up to 85% financing and 40-50 years amortization.

Looking to start or grow your real estate portfolio? Contact me, Hafeez Imran, a trusted Ontario broker, to help you find deals and analyze financing options tailored to your goals.

Affordable Rents Defined: Rents set at 30% or less of the median renter household income for the area.

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MLI Select Program

This program incentivizes investors to contribute to affordable, energy-efficient, and accessible housing by offering exceptional financing terms.

Key Features:

  1. Up to 95% Financing: Only 5% down payment required.
  2. Amortization Up to 50 Years: Reduced monthly payments.
  3. Premium Discounts: Based on achieving affordability and sustainability criteria.

What Are Affordable Rents?

Affordable rents are defined as rents that account for no more than 30% of the median household income for renters in a specific area. This concept ensures housing remains accessible to a broader demographic.

Example of Affordable Rents:

  • Median Renter Household Income: $60,000/year.
  • 30% of Income: $18,000/year or $1,500/month.
  • Affordable Rent for This Area: $1,500/month.

For properties to qualify under CMHC's MLI Select Program, a portion of units must meet this affordability benchmark. For example:

  • A 10-unit apartment building might have 3 units rented at or below $1,500/month to qualify.

 

Insurance Premiums in the MLI Select Program: The CMHC charges a mortgage insurance premium based on the loan amount. However, meeting program criteria can significantly reduce premiums.

Full Recourse Loans

In a full recourse loan, the lender has the right to claim not just the collateral (e.g., the property) but also the borrower's personal assets to recover the outstanding loan balance in the event of default.

Limited Recourse Loans

In a limited recourse loan, the lender’s ability to recover losses is restricted to the collateral itself. The borrower is not personally liable for any shortfall if the collateral's value is insufficient to cover the loan balance.

Replacement Reserve

A replacement reserve under the MLI Select program is a financial account set aside to cover the costs of major capital expenditures required to keep the property in good condition. These expenses might include:

  • Roof replacements.

  • HVAC system upgrades.

  • Window and door replacements.

  • Structural repairs or energy efficiency upgrades.

The goal is to ensure that properties remain sustainable and meet the program’s long-term objectives, such as affordability and operational efficiency.

Based on the CMHC MLI Select Program guidelines outlined in the uploaded document, replacement reserve requirements are discretionary. This means that:

  1. CMHC Determines the Need:

    • Whether a replacement reserve is required depends on the strength of the borrower and the specifics of the loan application.

  2. Not Mandatory for All Applications:

    • Unlike standard loans where replacement reserves are often required, MLI Select evaluates this on a case-by-case basis.

  3. Flexibility:

    • The discretionary nature allows CMHC to waive or adjust replacement reserve requirements for strong borrowers or projects with robust financial metrics.

  4. Risk Mitigation:

    • If CMHC perceives a higher risk in a particular project or borrower profile, it may mandate a replacement reserve as an additional safeguard.

 

Example of Insurance Premiums:

  • Loan Amount: $4,000,000
  • Standard Premium (Without Discounts): 4.5% = $180,000.
  • Discounted Premium (High Affordability and Efficiency): 1.75% = $70,000.
  • Savings: $110,000.

 


Example Case: New Construction with Affordable Rents

Sarah develops a 15-unit apartment complex in Toronto priced at $5 million. By ensuring that 4 units are rented at affordable rates ($1,500/month) and implementing energy-efficient systems, Sarah qualifies for the MLI Select Program.

  • Purchase Price: $5,000,000

  • Down Payment (5%): $250,000
  • Loan Amount (95%): $4,750,000
  • Insurance Premium: $4,750,000 × 1.75% = $83,125
  • Amortization Period: 50 years
  • Result: Reduced monthly payments and higher cash flow.

 


CMHC Standard Rental Housing Program: Flexibility for All Investors

For investors not focused on affordability or sustainability, the Standard Rental Housing Program provides flexibility while still offering competitive financing terms.

Key Features:

  1. Up to 85% Financing: Ideal for a wider range of properties.
  2. Amortization Periods: 40 years for existing buildings, 50 years for new construction.
  3. No Criteria: Suitable for projects that don’t meet MLI Select standards.

Insurance Premiums in the Standard Program:

  • Loan Amount: $4,000,000
  • Insurance Premium (85% LTV): 4.5% = $180,000.
  • Limited or no discounts for affordability or energy efficiency.

Example Case: Resale Investment with Traditional Terms
Michael purchases a 20-unit property in Calgary for $4 million using the Standard Rental Housing Program.

  • Purchase Price: $4,000,000
  • Down Payment (15%): $600,000
  • Loan Amount (85%): $3,400,000
  • Insurance Premium: $3,400,000 × 4.5% = $153,000
  • Amortization Period: 40 years
  • Result: Michael enjoys flexible financing and modernizes the property to increase rents.


Comparing the Two Programs

Feature MLI Select Program Standard Rental Housing Program
Maximum Financing (LTV) Up to 95% Up to 85%
Amortization Up to 50 years Up to 40-50 years
Insurance Premium Discounts Yes, based on criteria Limited or none
Eligibility Requirements Affordability, efficiency, or accessibility None


Call to Action: Work With Me

Navigating these programs can be complex, but with the right guidance, you can make profitable decisions. As a licensed Ontario broker, I specialize in helping investors find high-potential properties, analyze financing options, and secure deals that maximize returns.

Contact me, Hafeez Imran, today to start building your real estate portfolio. Let’s crunch the numbers and find your next investment opportunity!


Why Choose CMHC-Backed Financing?

  • Lower down payments mean less upfront capital.
  • Longer amortizations ensure better cash flow.
  • Premium discounts significantly reduce borrowing costs.

Don’t wait—reach out now to learn how CMHC financing can unlock your investment potential!

Find out examples for detailed feasibility analysis 

Example 1 - End to End (from Land acquistion to management to selling)

Example 2 - Turnkey Feasibility for 16 Plex towns in Calgary

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