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23 Jul Multi-unit loan insurance programs

The Canada Mortgage and Housing Corporation have allotted $3.75 billion to finance multi-unit rental construction until 2021 in Canadian locales demonstrating dire need. Known for insuring mortgages, the CMHC is offering several programs with steep incentives for developers.

The National Housing Strategy (NHS) unveiled by the federal government last year give the CMHC a central role in financing much needed rental units across the country. 

Carla Staresina, VP of client relationship management at CMHC, says it’s quite a wide spectrum when they look at multi-unit loan insurance programs. 

“Start at insurance for anyone wanting to build multi-unit from the far end of the spectrum and then we go to the multi-unit flex insurance loan program, where we have increased loan to value, possibly some decreases in premiums, longer amortization, and the mortgage loan insurance flex financing.

“Then it goes into what we call the Rental Construction Financing Initiative, which is a direct loan, and higher degrees of affordability are needed and higher degrees of accessibility are needed.”

Flex Financing, a program where loans up to 95% can be secured with lower interest rates & premiums with amortization stretched to 40 years is one option. Another is the Rental Construction Financing Initiative, a direct loan with higher degrees of affordability and accessibility needed. 

“We’ve always been involved with multi-unit mortgage loan insurance, but we have more programs available now to the National Housing Strategy, and we’re most definitely trying to increase the supply of purpose-built rentals,” said Staresina. 

“I want to make this clear, it’s not a shift from homeownership to rental: it’s just making sure both demands are being met and that we have the products to fill those demands, depending on where people live and the affordability needs they have.”

CMHC funding opportunities and mortgage loan insurance products

 

Mortgage Loan Insurance: Affordable Housing

Build, repair or improve rental housing: 

  • Higher loan-to-value ratios
  • Loan advances of 85-95% of costs during construction
  • Debt coverage ratios as low as 1.10 for standard rentals
  • Amortization periods up to 40 years
  • Reduced premiums

 

Mortgage Loan Insurance: Standard Rental Housing 

Build, buy or refinance standard multi-unit rental housing:

  • Higher loan-to-value ratios
  • Loan advances up to 75% of the lending value during construction
  • Lower debt coverage ratios
  • Preferred interest rates
  • Amortization periods up to 40 years

 

Mortgage Loan Insurance: Retirement Homes 

Build, buy or refinance a retirement home for seniors: 

  • Higher loan-to-value ratios
  • Loan advances up to 70% of the lending value during construction
  • Lower debt coverage ratios
  • Preferred interest rates
  • Amortization periods up to 40 years

 

Mortgage Loan Insurance: Supportive Housing 

Build, buy or refinance supportive rental housing:

  • Higher loan-to-value ratios
  • Loan advances up to 75% of the lending value during construction
  • Lower debt coverage ratios
  • Preferred interest rates
  • Amortization periods up to 40 years

 

Mortgage Loan Insurance: Student Housing 

Build, buy or refinance student housing:

  • Higher loan-to-value ratios
  • Loan advances up to 75% of the lending value during construction
  • Lower debt coverage ratios
  • Preferred interest rates
  • Amortization periods up to 40 years

 

Mortgage Loan Insurance: Single Room Occupancy 

Build, buy or refinance single private rooms in multiple tenant buildings:

  • Higher loan-to-value ratios
  • Loan advances up to 75% of the lending value during construction
  • Lower debt coverage ratios
  • Preferred interest rates
  • Amortization periods up to 40 years

Contact me for more information on multi-unit construction.



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