CMHC Latest Update to MLI Select Construction Rental Achievement Holdback | | |
As 2025 comes to an end, there has been a steady stream of loan activity and adjustment at Citifund. Please see a selection of recent transactions below. On November 28th, CMHC issued ‘Advice No. 268’ updating standards for MLI Select construction and term financing. Here are the key notes and takeaways:
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Rental Achievement Holdback (RAH). For the last year, some CMHC construction applications have been required to include a holdback of the full loan amount until rents are achieved. This was often reducing a loan from 95% LTV/LTC to 75% LTV/LTC during the construction period. For example, on a $50M new apartment, the approved loan would be approved at $47.5M but only $37.5M could be advanced during construction. The clients have had the option to leave in more equity (in this case $10.0M) or borrow a second mortgage (which has been challenging). To simplify, Advice No. 268 has all construction loans at the full 95% LTV (or below a 1.2 DSCR) be reduced to 85% LTV or LTC (whichever is lower) – a simple 10% loan reduction. This is an improvement in that full leverage projects are clear to the reduction scale, and it is 85% not 75%.
What is arguably the best part of this change is that loans under 95% LTV/LTC (which are the vast majority in major markets) are expected to have no rental achievement holdback. This is a solid change and is effective immediately.
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Energy Efficiency (EE). For new construction applications and starting September 30th (2026), the 2020 National Building Code and the 2020 National Energy Code of Canada for Buildings will be adopted (from 2017 NECB). Also adjusted is the MLI Select point system. The EE standard is now more robust. This is most impactful in Alberta and Ontario. In British Columbia, CMHC is still allowing BC Step Code 3 to qualify for level 3 (50 points) of MLI Select.
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Completion Takeout Timing. When an apartment is built conventionally, the CMHC takeout needs to be funded within six months of issuance of the CMHC certificate. With some projects taking a long period of time to stabilize, CMHC is limiting the borrower’s time to stabilize. If the loan is not ready to fund within six months, a new application needs to be submitted.
For a more in-depth breakdown of any apartment, condo or ICI projects, please reach out to a Citifund broker.
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RENFREW VILLAGE
Vancouver, BC
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$67,604,000
CMHC MLI Select Takeout Financing
| | | Citifund arranged an 87% loan to cost CMHC insured takeout loan under the MLI Select program for an 8-storey mixed use rental apartment building in Vancouver, BC. The 5-year term is priced at 3.512% with a 50-year amortization. |
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$50,154,000
CMHC MLI Select Construction Financing
| | | Citifund arranged a 94% loan to cost CMHC insured construction loan under the MLI Select program for a 5-storey rental apartment building in Langley, BC. The 24-month construction financing is priced at Prime less 0.35%. This financing was approved with no rental achievement holdback on the construction loan amount. |
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GLADYS APARTMENTS
Abbotsford, BC
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$43,567,000
CMHC MLI Select Construction Financing
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Citifund arranged a 90% loan to cost CMHC insured construction loan under the MLI Select program for a 6-storey mixed use rental apartment building in Abbotsford, BC. The 24-month construction financing is priced at Prime less 0.35%.
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RENTAL APARTMENTS
Vancouver, BC
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$26,981,000
CMHC Market Refinancing
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Citifund arranged separate CMHC insured loans to refinance three rental apartments located in the
Grandview-Woodland neighbourhood in Vancouver, BC. Citifund was able to fund the loan within 1 month from CMHC COI issuance beating a tight timeline to the bond pool cutoff. The 5-year term rate was fixed at 3.388%.
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3 RENTAL APARTMENTS
Vancouver & Burnaby, BC
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$13,970,000
Bridge Financing
| | | Citifund arranged a 70% LTV repositioning bridge loan to facilitate the acquisition of one apartment building and the renovation of all three buildings. The two-year bridge loan is fixed at 5.65% with interest only payments. | | | | |
$9,250,000
Inventory Financing
| | | Citifund arranged a 65% LTV inventory loan to refinance five remaining luxury strata townhomes within a 20 unit development. The 18-month inventory loan is priced at P+2.75%. | | | | |
