Urgent Updates: What You Must Know About the 2024 CMHC MLI Select Changes
- Octavian Vasilovici
- Jan 29
- 3 min read
The CMHC MLI Select program was initially introduced to support the development of affordable, accessible, and sustainable rental housing across Canada. Designed to provide developers and property owners with attractive financing options, the program offered incentives such as higher loan-to-value ratios, longer amortization periods, and flexible repayment structures. By focusing on affordability, energy efficiency, and accessibility, MLI Select helped address the country's growing housing demand while promoting environmentally responsible construction.
On November 15, 2024, the program underwent significant changes, reflecting CMHC's commitment to improving risk management and aligning with evolving market conditions. Whether you're planning your next major development or securing financing, proactive planning is crucial. Here’s what you need to know and how these updates impact your strategy.
1. Construction Loans: A New Risk-Based Reality
Forget the days of receiving 95% of your loan upfront during construction. CMHC now withholds up to 25% until your project achieves rental income and occupancy benchmarks.
What you need to consider:
Developers: Secure additional capital and enhance financial forecasting to mitigate cash flow challenges.
Lenders: Conduct more rigorous due diligence, focusing on market demand and developer credibility.
Investors: Set realistic rental projections to ensure long-term stability.
Strategic Recommendation: Engage financial advisors early to validate market assumptions and ensure project viability.
2. Lease-Up: The Key to Unlocking Full Funding
Full funding now depends on achieving rental targets, making pre-leasing strategies more critical than ever.
Proactive strategies to implement:
Developers: Utilize advanced leasing tactics such as virtual tours and data-driven marketing to attract tenants.
Property Owners: Partner with experienced leasing teams to accelerate occupancy and strengthen revenue streams.
Key Takeaway: A robust lease-up strategy enhances investor confidence and project longevity.
3. Enhanced Security Requirements
CMHC now requires additional financial safeguards, such as bonding, collateral, or reduced loan amounts.
How it affects you:
Developers: Prepare for higher upfront costs and stricter financial requirements.
Lenders: Enjoy increased risk mitigation and greater confidence in project completion.
Expert Advice: Work with legal and financial consultants to optimize bonding strategies and facilitate approvals.
4. Balancing Energy Efficiency with Affordability
Energy efficiency criteria have been adjusted, focusing on sustainable yet cost-effective solutions.
How to stay compliant:
Implement high-efficiency HVAC systems, insulation, and window solutions that balance costs and performance.
Leverage smart design choices to meet accessibility and sustainability standards without inflating budgets.
Pro Insight: Optibuild Consulting helps you align energy goals with affordability, ensuring compliance and cost-effectiveness.
5. Comprehensive Appraisals Now Required
Projects with 25+ units must undergo in-depth appraisal evaluations covering income potential, market comparisons, and construction costs.
Why this matters:
Plan appraisals early to avoid delays and ensure smooth approvals.
Work with experienced appraisers to meet CMHC’s criteria efficiently.
6. Environmental Screening Process
If your site has environmental contamination concerns, CMHC now requires an early review with funding contingent on issue resolution.
Steps to take:
Developers and investors should proactively address environmental risks to stay on track.
Lenders benefit from thorough risk assessments before committing funds.
7. Streamlined Insurance Commitments
To improve transparency and efficiency, CMHC now mandates earlier insurance commitments from lenders.
What it means for stakeholders:
Borrowers gain earlier clarity on financing conditions.
Brokers and lenders must maintain distinct roles for enhanced transparency.
Next Steps for Your Success
Navigating these changes requires strategic planning and expert guidance. Here’s how to stay ahead:
Developers: Optimize financial models and engage experienced consultants.
Lenders: Proactively align clients with CMHC’s evolving criteria.
Investors: Prioritize well-structured projects with solid lease-up plans.
Property Owners: Focus on sustainable yet affordable solutions.
Partner with Optibuild Consulting
Adapting to CMHC’s new requirements can be challenging—but you don’t have to do it alone. Our team offers expert support in optimizing energy efficiency, securing financing, and streamlining compliance.
Contact us today to ensure your project’s success in 2025!