Finance Multi-Family Properties with 5% Down: CMHC vs Conventional (5+ Units)
In this episode, Scott Dillingham compares CMHC insured and conventional financing for multifamily properties, revealing which path saves more money long-term. Scott explains that conventional bank financing for…
Show notes
Did you know your clients can buy a 5+ unit apartment building with as little as 5% down using CMHC's MLI Select program — including a 50-year amortization? In this episode, Scott Dillingham compares CMHC insured and conventional financing for multifamily properties, revealing which path saves more money long-term.
Scott explains that conventional bank financing for commercial multifamily properties typically limits borrowers to 25-year amortizations and 75% loan-to-value ratios, with some exceptions reaching 30 years and 80% LTV. These restrictions significantly impact how much investors can qualify for because commercial lenders calculate loan amounts based on the property's cash flow rather than personal income. When that cash flow is analyzed over a shorter amortization period, the resulting loan amount is substantially lower than what could be achieved through alternative programs.
Understanding CMHC MLI Standard and MLI Select Programs
The episode focuses on two powerful CMHC programs that transform multifamily financing possibilities. The MLI Standard program offers up to 85% loan-to-value with amortizations extending to 40 years, providing significantly better terms than conventional options. However, the MLI Select program takes these benefits even further by introducing a points-based system that rewards investors for meeting affordability, energy efficiency, and accessibility criteria.
Under MLI Select, projects earning at least 100 points can access financing at 95% loan-to-value with amortizations stretching to 50 years. This represents double the amortization period available through traditional bank channels. The program evaluates three key areas: the proportion of units with rents at or below 30% of median income, energy efficiency improvements, and the percentage of accessible units within the property. Higher scores translate to better financing terms, including reduced insurance premiums.
Why CMHC-Insured Financing Changes the Game
Scott emphasizes that the mathematical impact of these differences cannot be overstated. A property analyzed under a 40 or 50-year amortization will qualify for substantially more financing than the same property evaluated under a 25-year period. This means investors can either purchase larger properties or put less money down on their acquisitions. Current interest rates for CMHC-insured multifamily mortgages are running in the low to mid-three percent range, which compares favorably even to residential variable rates.
The trade-off involves a CMHC insurance premium that gets added to the loan amount, similar to how residential mortgage insurance works. However, the combination of lower interest rates, longer amortizations, and higher loan-to-value ratios typically makes this premium worthwhile for most multifamily investors.
The Critical Role of Mortgage Brokers
A key takeaway from this episode is that most banks do not offer CMHC-insured multifamily programs. They only provide conventional financing options, which means investors who go directly to their bank may be limiting their purchasing power without realizing it. Working with a mortgage broker who specializes in commercial and multifamily financing ensures access to the full range of available programs and helps investors maximize their qualification amounts.
For realtors working with multifamily buyers, understanding these financing differences positions you to add significant value to your client relationships. Guiding investors toward the right financing solutions before they start shopping can help ensure deals actually close rather than falling apart during the qualification process.
Key Takeaways
- Conventional bank financing for 5+ unit properties typically offers 75% LTV and 25-year amortizations, significantly limiting how much investors can qualify for compared to CMHC-insured options
- CMHC MLI Standard provides up to 85% LTV with 40-year amortizations, while MLI Select can offer 95% LTV with 50-year amortizations for projects meeting affordability, energy efficiency, and accessibility criteria
- Commercial multifamily loans are calculated based on property cash flow, meaning longer amortization periods directly translate to higher qualifying loan amounts
- Current CMHC-insured multifamily rates are in the low to mid-three percent range, often better than residential variable rates
- Most banks only offer conventional commercial financing, making mortgage broker relationships essential for accessing CMHC programs
- MLI Select uses a points system where projects earning 100+ points qualify for the best financing terms, with points awarded for affordable rents, energy improvements, and accessible unit design
Links to Show References
- LendCity Mortgages: lendcity.ca
- CMHC MLI Select Program Information: cmhc-schl.gc.ca/professionals/project-funding-and-mortgage-financing/mortgage-loan-insurance/multi-unit-insurance/mliselect
- (00:00) - – Introduction to Multifamily Commercial Financing
- (00:30) - – Why Investors and Realtors Misunderstand Multifamily Qualification
- (01:00) - – CMHC MLI Standard vs MLI Select Programs Explained
- (01:45) - – Conventional Bank Financing Limitations: LTV and Amortization Restrictions
- (02:15) - – MLI Select Points System: Affordability, Energy Efficiency, and Accessibility
- (03:00) - – 95% LTV and 50-Year Amortization Benefits at 100 Points
- (03:45) - – CMHC Insurance Premiums and Current Interest Rates
- (04:30) - – Why Longer Amortization Dramatically Increases Borrowing Capacity
- (05:00) - – Why Mortgage Brokers Outperform Banks for Multifamily Deals
Transcript
Introduction
Welcome to the Close More Deals podcast for realtors, the no BS podcast that turns stalled real estate deals into signed contracts and flaky buyers into loyal clients. I'm your host, Scott Dillingham, a battle-tested mortgage expert who's closed over $2B+ in real estate transactions. Each week, I unpack proven lending programs, negotiation hacks, mindset shifts, and insider tools from top producers so you can close faster, earn bigger, and crush your goals. Ready to dominate?
Hit play and let's seal the deal. Welcome back to the Close More Deals podcast. I'm your host, Scott Dillingham. Today, I'm going to be talking to you about financing commercial properties and the best way to finance them.
Now, commercial, there's so many different property types. So today, I'll be speaking specifically about multifamily. So what I see in the market is a lot of multifamily investors, they don't really understand, nor do the realtors, how to run the numbers and qualify a multifamily residential property. So there's two main programs that I'll discuss here today, and I'll show you kind of how we do it.
But the two programs are CMHC, MLI Standard, and MLI Select. So you can go conventional, which is through the banks, which has quite a bit of negatives, or you can go insured. And to give you the difference between them is if you go with a conventional at the bank, you are stuck with a 25-year amortization. A few banks can do an exception and go to 30 years as an amortization for these rental properties.
The Core Idea
And generally speaking, you're at 75% loan to value. Some might go to 80 on exception. Okay, when I say multifamily, I'm speaking of five units or above. Now, with the CMHC Standard and MLI Select program, these are insured.
So you're getting, just like when somebody buys their primary residence, ultimately the CMHC is reviewing and they're approving the multifamily properties. So what they do is they analyze the numbers using a cash flow calculator. But the massive benefit to going with CMHC is the amortizations and the loan to value. So under the standard program, they'll actually go to up to 85% loan to value.
And then they'll finance this over up to a 40-year period, which is fantastic. Now the MLI Select program, this is a little more in depth. This program is easier to qualify for on new properties that are vacant. So you can set it up properly.
Because ultimately, they're looking for an affordability component. They're looking for an energy-friendly component. And they're looking for an accessible component. And depending how affordable your rents are across your units or how energy-friendly it is, you get points.
Deep Dive
And the more points you get, the better the terms are. So if we were to get at least 100 points on a transaction under the MLI Select, you can actually finance 95% of the purchase price with a 50-year amortization, which is absolutely crazy. That's double what the banks are offering. So the thing for you that I think is important to know is just going to the bank is not the answer.
Most banks don't have the insured program. They only offer the conventional. So think about it. The banks on the commercial side, they lend based on the property's cash flow.
Well, if they're only going to analyze this and review it over a 25-year period, you're going to be heavily restricted on your loan amount compared to if you were being reviewed under a 40-year amortization period. You see what I mean? Now, the one downside, and I will call this out, but the one downside to the CMHC program is there is a fee for this. Just like regular homes that CMHC finances, they charge a fee, and they add the fee into the loan.
So the borrower does end up paying a fee to access this, but you are getting lower rates. We're seeing some low to mid threes, which is fantastic. I'm recording this at the start of January, 2026. So we're seeing low to mid threes.
Practical Steps
Again, you can't get that on residential. You can get maybe mid threes, but that's your primary home, and that's you getting a variable rate as of today. So the rates are better, amortization is longer, and the LTV is higher. So it's just every investor's dream.
So anyways, I hope this helps and shed some light on some of the programs out there. Don't let your client go to the bank when they're buying multifamily. The amount that they're going to qualify for is going to be drastically less. And I mean drastically.
This is such a big, big difference. It's not even fathomable how big of a difference this is. So let us know. Reach out.
The contact details will be in the show notes below. Would love to help you and your clients along this journey to maximize what they can qualify for their rental properties. Thank you. Have a great day.
Key Takeaways
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And lastly, all the resources that we spoke about are at the bottom of the show notes. Looking forward to seeing you in the next episode.