MLI Select: A multi-unit mortgage loan insurance product for companies that care

March 29, 2022

Updated May 1, 2023.

Key takeaways

  • This CMHC financing program provides generous mortgage loan insurance incentives for energy-efficient multi-unit housing.
  • Based on a points system, the best terms are unlocked once you score 100 points.
  • Big Block can help you achieve 100 points on new construction through energy efficiency alone.

Our clients care deeply about providing their community members with housing that is energy efficient, affordable, and accessible, which is why we’re excited to highlight a new program from the Canada Mortgage Housing Corporation called MLI Select.

MLI Select is a multi-unit mortgage loan insurance product that replaces an older CMHC program called MLI Flex. Designed for both new construction and existing properties, the new program has a big focus on energy efficiency, affordability and accessibility, using a points system to unlock insurance incentives like reduced premiums and longer amortization periods.

Grants can sometimes be difficult to achieve and are often earmarked for priority groups like Indigenous people, seniors, and women and children. The MLI Select program is a good option for organizations that might be interested in a purely energy efficient or affordable housing project that isn’t designated for specific groups.

Most rental properties with five or more units are eligible, though student housing is only eligible for energy efficiency and accessibility. Retirement homes require a minimum of 50 units or beds.

How many points can you achieve with MLI Select?

The more dedicated your project is to energy efficiency, affordability and/or accessibility, the more points you score, and the more advantageous your loan insurance terms are. Projects must score a minimum of 50 points to qualify, and the best terms are unlocked once you score 100 points, though there are no further benefits for scoring higher than that.

One nice aspect of the program is that it isn’t one size fits all. There are different ways to approach the points system — you can tackle it from a purely energy efficiency angle, or a combination of all three.

For example in new construction, you could score 100 points by having your building rated as 40% above code in energy efficiency and GHG reductions over 2017 standards. You could also score 100 points by combining a 25% reduction over current performance and having 10% of the units earmarked as affordable rentals.

Graphic from commercial mortgage broker Canada ICI.

Big Block Construction can help you achieve 100 points on new construction through energy efficiency reductions alone — the Central Urban Metis Federation Inc. Round Prairie Elders’ Lodge in Saskatoon, Saskatchewan saw a reduction of greater than 40%. Reaching that level of energy efficiency is already in our wheelhouse and it can be done at marginal costs that would be negated by the advantageous terms of this program.

Once you get to that 100 point threshold, you can get very good benefits like a 50-year amortization and limited recourse, which means there are no personal guarantees on the project, substantially reducing the risk for the builder/owner.

MLI Select insurance flexibilities

The insurance flexibilities you secure with MLI Select depend on how high you score, unlocking benefits at 50 points, 70 points and 100 points.

Benefits for new construction include:

  • Max Loan-to-Value Ratio: residential component up to 95% loan-to-cost; non-residential component up to 75% loan-to-cost.
  • Limited recourse at 100 points or higher, and CMHC may consider limited-recourse lending for LTVs equal to or below 65% LTV for non-profits, community-based organizations or social mandate driven borrowers.
  • Max amortization up to 50 years on the high end.
  • The loan may be advanced up to 95% of costs during construction. 
  • Generally, 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, but for insurance applications scoring a total of 100 points or more, CMHC may permit flexibility in net worth requirements.

For affordability, the borrower must commit to maintaining affordability for a minimum of 10 years, and affordability commitments of 20 or more years will be awarded an additional 30 points. Affordability must be demonstrated on an annual basis, but the energy efficiency and accessibility only need to be proven once.

The borrower must prove their competence and experience at managing the size of property they’re applying for, and the borrower must either have five years of management experience of a similar multi-unit residential property or have a contract in place with a property management firm.

Application fees for the product are based on a per unit or per bed basis at $100-$200 per unit or bed, but the premiums are generally more than offset by the savings from lower interest rates.

CMHC performs annual pricing reviews and increases to its mortgage loan insurance premium rates for multi-unit properties. If you have identified land, contact us today to request a concept and budget that meets MLI Select requirements for energy efficiency, affordability, and accessibility.

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