The Canada Mortgage and Housing Corporation (CMHC) MLI Select program is a loan insurance initiative designed to encourage the development, preservation, and improvement of affordable rental housing in Canada. This program helps real estate investors and developers by offering financial incentives for projects that meet specific criteria in affordability, energy efficiency, and accessibility.
Background of the Program
The MLI Select program was launched on March 7, 2022, to replace the previous MLI Flex program.
MLI Select aims to address gaps in affordable and sustainable rental housing. Rising demand for affordable homes, alongside aging rental infrastructure, created the need for solutions to balance profitability with social responsibility. CMHC designed MLI Select to incentivize housing that meets these needs while providing developers with more favourable financing terms.
What MLI Select Offers
The program provides financing incentives for real estate investors.
- Higher Loan-to-Value Ratios (LTV): Projects can qualify for loans covering up to 95% of the property’s value, reducing the equity required for financing.
- Extended Amortization Periods: Investors can access amortization terms of up to 50 years, lowering monthly debt obligations and improving cash flow.
- Reduced Mortgage Insurance Premiums: By meeting program criteria, participants benefit from lower upfront and ongoing costs, enhancing financial feasibility.
These benefits are aimed at offsetting the additional costs associated with meeting the program’s affordability, sustainability, and accessibility standards.
How the MLI Select Program Works
MLI Select operates on a scoring system designed to evaluate projects based on their alignment with three key criteria: affordability, energy efficiency, and accessibility. Each category is weighted, and projects earn points depending on the extent to which they meet or exceed CMHC’s benchmarks.
Affordability
Points are awarded based on the percentage of units offered at below-market rents. CMHC uses regional median market rent levels to define affordability, ensuring the criteria are tailored to local housing conditions. For instance, offering a significant portion of units at rents equal to or below 80% of the local median market rent would score higher. Projects can focus on long-term affordability commitments to maximize their score.
Energy Efficiency
Projects that meet or surpass specific energy performance targets earn points in this category. For example, retrofitting a building to achieve a 25% reduction in energy consumption compared to a baseline measure, such as local building code standards, could result in a higher score. CMHC encourages the adoption of green technologies like high-efficiency HVAC systems, renewable energy sources, and enhanced insulation to promote sustainable building practices.
Accessibility
This category rewards projects incorporating features that improve access for individuals with disabilities or mobility challenges. Points are earned by including fully accessible units, barrier-free entrances, elevators, and accessible common areas. CMHC provides clear guidelines for meeting accessibility standards, ensuring consistency across projects.
Higher cumulative scores in these categories translate to more favourable loan terms, such as higher loan-to-value ratios, reduced premiums, or extended amortization periods. Investors have the flexibility to focus on one or more criteria based on their project’s goals, market demand, and available resources. This adaptability allows developers to design projects that meet both program requirements and their financial objectives.
Requirements for Participation
To qualify for MLI Select benefits, projects must meet specific criteria and provide supporting documentation.
Meet CMHC’s Eligibility Criteria
The program applies to multi-unit residential properties, including new construction, renovations, and retrofits, intended for long-term rental use. Certain types of properties may have stricter requirements.
Demonstrate Alignment with Program Targets
Applicants must submit detailed plans showing how their project addresses affordability, energy efficiency, or accessibility. This includes documents such as rent schedules, energy performance reports, or architectural plans for accessible features.
Commit to Long-Term Compliance
Projects must maintain program requirements over time, particularly affordability thresholds. For affordability, this means adhering to agreed-upon rent levels for at least 10 years.
Who Can Use the MLI Select Program?
The program is available to a wide range of stakeholders, including:
- Developers of new rental housing projects
- Investors acquiring and retrofitting older buildings
- Non-profits and housing providers focused on affordable housing initiatives
MLI Select applies to both new construction and renovations, adding to its flexibility.
More information can be found on the CMHC site.
