Benefits of CMHC Insured Loans:
Preferred Interest Rates: Investors gain access to favorable rates, reducing overall borrowing costs.
Lower Borrowing Costs: CMHC’s backing often results in reduced rates and costs.
Simplified Mortgage Renewals: CMHC support facilitates the renewal process throughout the mortgage’s life.
Eligibility Criteria for Multi-Residential Properties:
Project Type: CMHC supports projects providing standard rental housing in self-contained units.
Minimum Project Size: Eligible projects must have at least 5 units.
Non-Residential Component Limit: This component should not exceed 30% of the gross floor area or total lending value.
Loan-to-Value Ratio Flexibility:
CMHC allows up to 85% loan-to-value ratio for various projects, offering flexibility for projects including property improvements.
Investment Security:
Mortgage Options: Accepts first, second, and pari passu mortgages.
Limited Recourse: For loans not exceeding 65% of the lending value, the focus is on the property, not the borrower.
Financial Requirements:
Minimum Borrower Net Worth: At least 25% of the loan amount, with a minimum of $100,000.
Debt Coverage Ratios: Tailored according to the property size.
Guarantee Requirements: Vary based on financing type.
Loan Advancement:
During Construction: Up to 75% of costs or lending value.
Existing Properties with Improvements: Conditions vary based on rental income impacts.
Amortization Considerations:
CMHC considers periods up to 40 years, with a surcharge for periods beyond 25 years.
Who Can Apply?
Applicants with experience in managing similar properties or those with a contract with a professional property management firm.
CMHC Programs for Multi-Residential Investments:
- Affordable Housing Innovation Fund: Offers loans, forgivable loans, and financing options supporting housing innovation.
- Community Housing Funding: Increases capacity in the community housing sector.
- Federal Lands Initiative: Provides surplus federal lands for affordable housing development.
- Indigenous Housing Funding: For construction and renovation on and off reserves.
- Housing Accelerator Fund: Incentive funding for local governments to boost housing supply.
- Housing Supply Challenge: $300 million in funding to address housing supply barriers.
- Innovation and Research Funding: Promotes excellence in housing innovation and research.
- National Housing Co-Investment Funding: Offers construction loans and contributions.
- Rapid Housing Initiative: For rapid construction of new housing or converting existing buildings to affordable housing.
- Rental Construction Financing Initiative: Low-cost loans for sustainable rental apartment projects.
- Shared Equity Mortgage Providers Fund: Assists Canadians in achieving affordable homeownership
CMHC insured loans are vital for investors looking to enter or expand in the multi-residential property market. For comprehensive details on fees, premiums, and specific program requirements, it’s advisable to consult CMHC’s information sheets and their website.