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

Key takeaways

• This CMHC financing program provides generous mortgage loan insurance incentives for energy-efficient, affordable and accessible multi-unit housing.
• Based on a points system, the best terms are unlocked once you score 100 points.

The Canada Mortgage Housing Corporation’s MLI Select program has been exceedingly popular with Canadian developers. In 2023, more than 127,000 rental units were insured through MLI Select, and the strong uptake of the program contributed to building nearly triple the climate-compatible homes CMHC targeted that year.

MLI Select is a multi-unit mortgage loan insurance product designed for both new construction and existing properties, with a focus on energy efficiency, affordability and accessibility. It uses 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 an energy efficient and 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 does the MLI Select points system work?

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.

Once you get to that 100 point threshold, you can get very good benefits like a 55-year amortization and limited recourse, which means there are no personal guarantees on the project, substantially reducing the risk for the builder/owner.

June 2024 changes to the program

In June 2024, CMHC announced some major changes to the MLI Select Program, including a change to the energy efficiency criteria system. Under the previous criteria, applicants could achieve 100 points through energy efficiency alone, but effective June 19, energy efficiency points are capped at 50.

This means that projects will need to have an affordability component to score the maximum 100 points. To qualify for affordability points, a certain percentage of units must be available at 30% of median renter income for a minimum of 10 years.

Other changes include:

• Removing the special interim measures implemented in May 2020 limiting the use of refinance funds.
• A new Environment Site Contamination policy that aligns with standard industry practices. Mortgage loan insurance approvals will need confirmation of a contamination-free site.
• “New construction” now includes projects built in place of a demolished structure.
• Allowing only approved lenders to apply to CMHC.

After unprecedented uptake of the program in 2023, CMHC has doubled its processing rate to accelerate approvals, and the corporation expects to see an increase in loans available through more federal government support.

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.

MLI Select webinar

For a deep dive into the MLI Select program, watch this webinar with Jeremy Tessier from CMHC, and Andy Oding and Scott Schrier with Building Knowledge Canada. Note: This webinar was conducted before the June 19, 2024 changes to the energy efficiency criteria.