Financing
Financing a Toronto multiplex: CMHC MLI Select explained
How CMHC's MLI Select program works for rental buildings of five or more units, what the points system rewards, and the questions to ask your lender.
Published: 2 min read
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Financing is often what makes or breaks a multiplex. For larger rental projects, CMHC’s MLI Select program is one of the most talked-about options. Here is how it works in plain language.
What MLI Select is
MLI Select is a mortgage loan insurance product from Canada Mortgage and Housing Corporation (CMHC) for multi-unit rental properties. Because CMHC insures the loan, lenders can offer terms that are not usually available for rental buildings.
Who it is for
- Rental properties with five or more units. It can apply to a sixplex, but not to a fourplex.
- Both new construction and the purchase or refinance of existing buildings.
The points system
Borrowers earn points by committing to outcomes in three areas, and need a minimum number of points to qualify:
- Affordability: keeping some rents below set thresholds
- Energy efficiency: beating building code energy performance
- Accessibility: designing units to accessibility standards
More points generally unlock better terms, such as higher loan-to-value and longer amortization.
| Term | Your project |
|---|---|
| Minimum points needed | [placeholder] |
| Maximum loan-to-value / loan-to-cost | [placeholder] |
| Maximum amortization | [placeholder] |
| Insurance premium | [placeholder] |
| Commitment period for affordability | [placeholder] |
Why amortization matters
A longer amortization lowers the monthly payment, which can be the difference between a building that carries itself and one that does not. Hover over the chart to compare.
- 25-year amortization
- 30-year amortization
Calculated with Canadian fixed-rate convention (interest compounded semi-annually, paid monthly). Illustrative math only, not a rate quote.
Source: Calculation: standard Canadian mortgage payment formula
View data table
| Interest rate | 25-year amortization | 30-year amortization |
|---|---|---|
| 3% | $4,732 | $4,206 |
| 3.5% | $4,993 | $4,476 |
| 4% | $5,260 | $4,755 |
| 4.5% | $5,535 | $5,042 |
| 5% | $5,816 | $5,337 |
| 5.5% | $6,104 | $5,639 |
| 6% | $6,398 | $5,948 |
| 6.5% | $6,698 | $6,264 |
| 7% | $7,004 | $6,586 |
Trade-offs to understand
- Affordability commitments last years. Make sure the rent limits work for your pro forma.
- Energy targets affect design. It is much easier to plan for them before drawings are done.
- Not every lender is equally experienced. Ask how many MLI Select deals they have closed.
Questions to ask your lender
- Which points tier makes sense for this project?
- How is the property valued at completion?
- What reports do you need (appraisal, energy model, environmental)?
- How long does approval usually take?
Sources
- CMHC: MLI Select TODO: verify
Last updated:
Information on this site is general in nature and is not legal, tax, financial or planning advice. Always confirm with the City of Toronto and qualified professionals.
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