MLI Select is an innovative new multi-unit mortgage loan insurance product focused on affordability, accessibility, and climate compatibility.

Access reduced premiums and longer amortization periods based on your level of commitment to affordability, accessibility, and climate compatibility using MLI Select.

MLI Select uses a point system to offer insurance incentives based on affordability, energy efficiency, and accessibility. Incentives are available for new construction and existing properties.

The more committed you are to social and environmental outcomes, the better the incentives. You can choose to focus on a single area like affordability or combine commitments to increase your points and incentives.

If you wish to learn more about MLI Select and how the incentives work, please don’t hesitate to contact us for a consultation.

MORTGAGE LOAN INSURANCE MULTI-UNIT MLI SELECT AT-A-GLANCE

CMHC’s MLI Select product offers scaling flexibilities to encourage the preservation and creation of affordable, accessible and climate compatible units. Flexibilities include higher loan-to-value ratios, increased amortizations, lower debt coverage ratios, and reduced premiums.

Property Type And Size

• New and existing affordable, energy efficient and/or accessible housing projects including: standard rental housing, single room occupancy (SRO), supportive housing and retirement homes. Student housing projects are only eligible to qualify under energy efficiency and accessibility.
• Minimum project size of 5 units except retirement homes where a minimum of 50 units/beds is required.

Non-Residential Component

Not to exceed 30% of gross floor area nor 30% of total lending value. Loan relating to non-residential component must not exceed 75% of lending value of non-residential component.

Criteria

Borrowers can commit to any combination of the following social outcomes, though a minimum of 50 points is needed to qualify for MLI Select.

Affordability

This outcome is assessed based on the percentage of units within the project with rents equal to or below the established threshold for the subject market.

New construction:

• Level 1 (50 points) – Min. 10% of units at max. 30% of median renter income
• Level 2 (70 points) – Min. 15% of units at max. 30% of median renter income
• Level 3 (100 points) – Min. 25% of units at max. 30% of median renter income

Existing properties:

• Level 1 (50 points) – Min. 40% of units at max. 30% of median renter income
• Level 2 (70 points) – Min. 60% of units at max. 30% of median renter income
• Level 3 (100 points) – Min. 80% of units at max. 30% of median renter income

In all cases, the borrower must commit to maintain affordability for a minimum of 10 years from the date of first occupancy of the project. Affordability commitments of 20 or more years will be awarded an additional 30 points.

Energy Efficiency

This outcome is assessed based on the improved performance over the baseline, which depends on if the building is new or existing.

New construction:

• Level 1 (30 points) – Min. 20% better than NECB/NBC
• Level 2 (50 points) – Min. 25% better than NECB/NBC
• Level 3 (100 points) – Min. 40% better than NECB/NBC

Existing properties:

• Level 1 (30 points) – Min. 15% decrease over current baseline levels
• Level 2 (50 points) – Min. 25% decrease over current baseline levels
• Level 3 (100 points) – Min. 40% decrease over current baseline levels

Accessibility

This outcome is assessed based on the level of accessibility and adaptable building design.

Level 1 (20 points):

• Min. 15% of the units are considered accessible in accordance with the CSA standard B651-18 or
• Min. 15% of units are universal design or
• The building receives Rick Hansen Foundation Accessibility Certification (60%-79% score)

Level 2 (30 points):

• Min. 15% of units are considered accessible in accordance with the CSA standard B651-18 and Min. 85% of units are universal design or
• 100% of units are universal design or
• 100% of units are accessible in accordance with the CSA standard B651-18 or
• The building receives Rick Hansen Foundation Accessibility Certification “Gold” (score of 80% or better)

Product Timelines

Affordability criteria:

• Applies for the entire duration of the affordability period beginning at the date of first occupancy for new construction or major renovation, and the interest adjustment date for existing buildings. Documentation is required to support ongoing compliance throughout the affordability period.

Efficiency criteria and accessibility criteria:

• Where improvements or construction are undertaken prior to the request for loan insurance, documentation confirming achievement of the criteria is required as part of the loan insurance application. Work must have been completed within 12 months of the request.
• Where insured financing is used to undertake improvements or construction, documentation confirming achievement of the criteria is required within 60 days after the last advance.
• Where improvements are completed with the borrower’s own resources or non-insured financing, documentation confirming achievement of the criteria is required within 24 months of the last advance.
• Unlike the affordability criteria, the energy efficiency criteria and/or the accessibility criteria do not need to be demonstrated on an annual basis. Once achieved, the borrower’s commitment is considered fulfilled and there are no further requirements.

Product Flexibilities

Based on total points awarded, the loan insurance application can benefit from the following flexibilities.

Total points Max. LTC/LTV Max. amortization* Rental achievement holdback Replacement reserve Recourse

New Construction
Min. 50 points Up to 95% Up to 40 years Waived Full Discretionary
Min. 70 points Up to 95% Up to 45 years Waived Full Discretionary
Min. 100 points Up to 95% Up to 50 years Waived Limited Discretionary

Existing Properties
Min. 50 points Up to 85% Up to 40 years May apply Full Full Limited Discretionary Discretionary Discretionary
Min. 70 points Up to 95% Up to 45 years
Min. 100 points Up to 95% Up to 50 years

*The maximum amortization period is the specified number of years or remaining economic life, whichever is less. Please refer to the fees and premiums information sheet for more information.

Maximum Loan-To-Value Ratio

• New construction: residential component up to 95% loan-to-cost; non-residential component up to 75% loan-to-cost.
• Existing properties: residential component up to 95% loan-to-value; non-residential component up to 75% loan-to-value.

Loan Advancing

New construction: the loan may be advanced up to 95% of costs during construction. Existing properties: the loan may be advanced up to 95% of value. The full loan is available once construction/improvement is complete.

Minimum Debt Coverage Ratio Requirements

Minimum DCR Residential space
Standard rental housing with 5+ units 1.10
Other shelter models: single room occupancy and supportive housing (5+ units) retirement homes (50+ units) 1.20

Non-residential space 1.40

Interest Rate

Fixed interest rate or floating (with ceiling rate).

Amortization

CMHC may consider amortization periods of up to 50 years. The amortization period must not exceed the remaining economic life of the property, as determined by CMHC.

Security Type

First, second and pari passu mortgages are permitted. Second mortgages are permitted as an interim measure.

Replacement Reserve Requirements

Replacement reserve requirements are discretionary under MLI Select and based on the strength of the borrower and application.

General Guidelines For Borrower Eligibility

The borrower must demonstrate competence and experience commensurate with the size and type of property for which mortgage loan insurance is being sought. The borrower or a corporation affiliated with the borrower must have at least five years of demonstrated management experience in the operation and management of similar multi-unit residential properties. Alternatively, a formal property management contract must be in place with a professional third-party property management firm.

Borrower Net Worth

The borrower must have a minimum net worth equal to at least 25% of the loan amount being requested, with a minimum of $100,000. For insurance applications scoring a total of 100 points or more, CMHC may permit flexibility in net worth requirements.

Guarantee Requirements

Construction or completion take-out financing:
The borrower and guarantor must provide their covenant/guarantee for 100% of the outstanding amount owing under the housing loan from time to time until projected rents have been achieved and stabilized for 12 consecutive months, at which time the additional guarantee required may be reduced to 40% of the outstanding loan amount owing under the mortgage, from time to time.

Purchase or refinance of existing properties:
For new loans on existing residential rental properties, the guarantee amount required by CMHC is 40% of the outstanding loan amount owing under the mortgage, from time to time.

Limited recourse:
CMHC may consider limited-recourse lending for LTVs equal to or below 65% LTV, or in cases where the borrower is unable to provide a meaningful covenant or guarantee such as non-profits, community-based organizations, or social mandate-driven borrowers, or in cases where a minimum of 100 points are achieved under CMHC’s MLI Select product offering. Notwithstanding, the borrower remains liable under a limited recourse loan for fraud and environmental liability in all cases. The recourse of the Approved Lender shall be limited to the property and the other assets taken as security and not personally against the borrower. In all cases, CMHC may require additional risk mitigation measures as it deems appropriate (e.g. equity retention, replacement reserves, collateral security, personal guarantees).

Source: cmhc-schl.gc.ca