CMHC MLI Select Program
Program Overview:
Purpose: Promoting the development of rental housing by providing financing and insurance for large-scale projects.
Target: Developers or landlords investing in rental properties.
Eligibility:
1. Minimum 5 residential units (including legal basement suites) per property.
2. Can be applied to new construction or existing properties.
3. Buyer's net worth must be at least 25% of the loan amount, with a minimum of $100,000.
Benefits:
1. Low Down Payment: Only 5% down payment required.
2. Long Amortization: Up to 50 years based on a point system.
3. Positive Cash Flow: Potential for high positive cash flow per month.
Criteria:
1. Property Type: Residential multi-units (e.g., townhomes, apartments).
2. Net Worth Requirement: Buyer must meet minimum net worth criteria.
3. Affordability Commitment: Borrower must commit to maintaining affordability for at least 10 years.
Interest Rate:
- Fixed rate over the term.
- Determined by a combination of the 5-or-10 year CMB rate and lender spread.
Awareness:
- Affordability commitment must be maintained for a minimum of 10 years.
- If selling during this time, the buyer must assume the mortgage and meet the net worth requirement.
Example:
- Property: 8 units for $2.5M.
- Rental Income: $18,000.
- Operating Expenses: $3,800.
- Mortgage: $10,800.
- Positive Cash Flow: $3,400.
Affordability Points:
- Designating 2 of 8 units as affordable.
- Rent increase limited to annual CPI.
This summary should provide a clear understanding of the CMHC Select MLI program and its key features for potential investors or developers looking to participate in rental housing projects in Canada.
