CMHC Select Program for Multi-Family Properties
A new mortgage product with great investment potential
Learn more about the MLI select advantages, points system, buyer qualifications, things to look out for, and more.
What you need to know about the MLI Select Program
Get the facts, not just the hype
If you’re an avid real estate investor, you may have heard of CMHC’s MLI Select Program…
Maybe you’re not sure how it works or whether you might be eligible. Or perhaps you’re already familiar with this mortgage product and looking for MLI Select projects in Calgary (or elsewhere in Alberta).
Either way, we’re here to help.
What is CMHC’s MLI Select Program?
In short, MLI Select is an insured mortgage product from CMHC for multi-family properties (both new and existing) with five or more units.
It provides incentives aimed at increasing housing in Canada that meets affordability, accessibility, and/or energy efficiency criteria.
These incentives come in the form of points, which can be applied towards more favourable mortgage terms for investors.
How does the MLI Select program work?
MLI Select offers incentives through a points program. These points are distributed based on a property’s qualifications in three areas:
- Affordability
- Energy efficiency
- Accessibility
You can choose to focus on one area or any combination of the three.
These points can then be applied to reduce your required down payment, increase your amortization period, and decrease insurance premiums.
To receive the maximum incentives (e.g., 5% down, 50 year amortization) a property must have a minimum of 100 points.
The point distribution differs depending on whether the property in question is an existing property vs. a new build. Find more details on the points system and the specific criteria on the CMHC’s MLI Select webpage or download the CMHC MLI Select fact sheet here.
Looking for MLI Select projects or existing properties?
Get connected to MLI Select opportunities in Calgary and surrounding areas.
Leverage our network to find MLI Select listings and off-market opportunities.
Advantages of the MLI Select program
This program has become very popular recently. Why? In short, with the maximum incentives, you could get a mortgage with as little as 5% down payment*, with an amortization of up to 50 years.
*Note: in addition to the 5% down payment, you may require further capital to cover closing costs, lender fee, broker fee, CMHC Insurance, appraisal costs, etc.
Higher loan-to-value ratios
With up to 95% LTV, the CMHC MLI Select program allows you to preserve capital, scale faster, and maximize your returns. Less down payment allows you to maintain liquidity for new opportunities or cash reserves.
Lower debt coverage ratios
The CMHC MLI Select program allows for a lower Debt Coverage Ratio (DCR) of 1.1, making it easier to qualify for financing.
Increased amortization
With up to 50-year amortization, the CMHC MLI Select program reduces monthly debt obligations, which helps improve cash flow. This extended term also enhances debt service ratios, increasing borrowing capacity.
Reduced premiums
The CMHC MLI Select Program allows for lower mortgage insurance premiums, compared to the CMHC Standard Rental Housing program.
DISAdvantages of the MLI Select program
While the MLI Select Program offers some great advantages, it’s equally important to be aware of the potential disadvantages.
- No pre-approval
- Interest rate not “locked in” until closing
- Process from application to funding can take 4-6 months
- Using the maximum 95% loan to value can make it difficult to be cashflow positive
- Fixed mortgage terms (5 or 10 years)
- Large penalties for breaking your contract
- Refinancing before the end of your term may not be possible
- Committing to CMHC to meet affordability, accessibility, and/or energy efficiency criteria for a set period of time
- Minimum 10-year affordability commitment
- Harder to sell the property before the end of the commitment
- Energy efficiency criteria are difficult to achieve in Alberta
- Accessibility criteria increases build cost
Each property may have its own, unique disadvantages. You’ll want a reliable realtor, mortgage broker/lender, lawyer, and/or other advisor to help you identify them.
MLI Select Criteria
Property Criteria
- Eligible property types: standard rental housing, single room occupancy (SRO), supportive housing, retirement homes, student housing (affordability criteria does not apply to student housing)
- Minimum size: 5 units or, for retirement housing, 50 beds (for retirement housing)
- Non-residential space: non-residential space (e.g., retail space) must not exceed 30% of the floor area nor 30% of total lending value
Borrower Criteria
- Minimum net worth of at least 25% of the loan amount being requested (minimum $100,000)
- CMHC may also look at the borrower’s past experience with similar types of properties
Not sure if you’ll qualify for MLI Select, but still interested in multi-family investment properties? There are still lots of possibilities – book a no-obligation consult and we’ll discuss options to suit your situation.
We’re Here to Help
Education
We’re passionate about educating our clients and fellow real estate investors. We’re constantly working to provide practical, no-nonsense information to anyone who may be interested in real estate investing.
Check out our Facebook Group, YouTube channel, in-person seminars, or contact us with your questions directly!
Realistic Analysis
There is currently a lot of ‘hype’ surrounding MLI Select projects. We’ll help you identify exaggerated claims and provide realistic, conservative deal analysis and projections.
While MLI Select can be a fantastic opportunity for some real estate investors, the fact is it’s not for everyone. We do our best to ensure our clients don’t commit to bad deals or have unrealistic expectations.
Client-Focused
We’re not trying to talk you into a deal that’s not in your best interest, unlike some players in the game. We want you to succeed long-term and will always provide our honest advice and feedback (even if it means talking you out of a deal).
After all, having satisfied, repeat customers helps us succeed in the long term, too!
Other Frequently Asked Questions
How do I find available MLI Select projects/opportunities in Calgary (or across Alberta?)
New builds: It can be difficult to find new build multi-family projects for MLI Select on your own, but we can help you find and review opportunities. We’ll also help ensure your interests are protected when evaluating builder contracts.
Existing properties: You can technically find existing MLI Select properties listed on the market, but a lot of them are off-market or pocket listings. Your best bet is to work with a trusted realty team (like us!) with the right connections to find these off-market deals.
Get in touch with us and we’ll find options to suit your search.
How long does it take to apply and get approval for an MLI Select mortgage?
Currently, it can take 4-6 months from application to receiving funding.
What are the MLI Select mortgage interest rates?
The CMHC MLI Select mortgage interest rates are primarily based on the Canadian Mortgage Bond (CMB) rates which can fluctuate daily. However, once your mortgage starts, your rate is fixed for 5 or 10 years.
Do you have any recommendations for MLI Select mortgage brokers?
Because of the complexity of MLI Select, it’s best to work with an experienced mortgage broker. We have trusted mortgage brokers and lender recommendations to help you succeed.
Can I get pre-approved for an MLI Select mortgage?
Unfortunately, the answer is no.
You can get your lender/mortgage broker to review your net worth and your likelihood to qualify, however, there is no formal pre-approval until you receive your Certificate of Insurance (COI).
How do MLI Select affordability criteria work? Is my rent controlled? Will future rent increases be capped?
If your property is in a province with rent control, any increases on designated affordable units must conform to provincial rent control guidelines.
In regions without rent control (such as Alberta), designated affordable units are subject to a percentage increase cap equal to the 12-month annual Consumer Price Index (CPI) in that region.
What is considered “affordable rent” under the MLI Select affordability criteria?
CMHC uses 30% of the median renter income (currently using 2019 numbers) as the maximum for an affordable unit.
For example, in Calgary, the median renter income is $69,500 so the current maximum rent for an affordable unit is $1737 per month.
Is there such thing as a “CMHC-backed” MLI Select project?
BEWARE of anyone advertising a project as “CMHC-backed” – there is no such thing! CMHC insures the LENDER, not you the purchaser/borrower. CMHC does not “back” any specific projects.
We’ve seen statements like this and other exaggerated claims lately… you’ll want to make sure you do your own evaluations and proformas, so you don’t go into any deal with any unrealistic (or straight-up incorrect) expectations.
Who is protected by CMHC mortgage insurance on an MLI Select mortgage?
CMHC mortgage insurance protects the lenders.
If a borrower defaults on their mortgage, the insurance ensures that the lender will be reimbursed for their losses. This protection encourages lenders to offer more favorable loan terms, such as lower interest rates and longer amortization periods, which can benefit borrowers as well.
Why is MLI Select so popular in Alberta, in particular?
CMHC uses 30% of the median renter income (currently using 2019 numbers) as the maximum for an affordable unit. Because Alberta’s income to rent ratio is comparatively so good it’s easier to meet the affordability requirement. For example, in Calgary the current maximum rent for an affordable unit is $1737 per month vs Toronto at a maximum of $1347. [Source]
Can I assign or sell an MLI Select project?
Currently, CMHC requires the buyer to assume the existing mortgage if the property is sold and the buyer must qualify under the same conditions as you did. Same goes with assignments, but you must also make sure that the builder will allow the assignment and be aware of their conditions.
Can I separate the titles on an MLI Select property once I close?
If you have a CMHC MLI Select mortgage in place, you cannot separate the titles.
If you wish to do this, it may be a possibility with a different mortgage product (e.g., NOT MLI Select) and would be dependent on the exact project, zoning, etc.
More questions?
Looking for MLI Select opportunities?
Please don’t hesitate to reach out. We won’t waste your time, talk you into a bad deal, or send you automated emails with listings that don’t suit your needs.