CMHC MLI Select Premiums Overhauled: What Multi-Family Investors Need to Know
Big news for apartment building investors: Canada Mortgage and Housing Corporation (CMHC) is shaking up how it charges mortgage insurance premiums on multi-family loans. Effective July 14, 2025, CMHC has overhauled the pricing for its Multi-Unit mortgage insurance programs, including the popular MLI Select product. In plain terms, the insurance premiums you pay to CMHC are now much more finely tuned to your loan’s risk factors – things like how high your loan-to-value is or whether you’re financing new construction. At the same time, CMHC is introducing new discounts for projects that achieve certain social goals (like affordable rents or green building features). Below, we’ll break down these changes in a conversational way, so you understand what it means for your next Ontario multi-family investment.
As seasoned investors, you know CMHC insurance is a double-edged sword: it adds a fee, but unlocks better financing terms – smaller down payments, longer amortizations, and lower interest rates than conventional loans. With this new pricing structure, those benefits are still on the table, but the cost side of the equation is changing. Let’s walk through the key inputs that determine your CMHC premium under the new rules, how the surcharges and discounts come into play, and how all of this impacts your total mortgage cost. Consider this a chat with your mortgage broker, breaking down the essentials without the heavy jargon.
What’s Changing in CMHC’s MLI Select Pricing?
CMHC’s annual review led to a significant revamp of multi-unit insurance premiums for applications submitted on or after July 14, 2025. Previously, the premium you’d pay was based on somewhat blunt categories – for example, whether your loan was for a purchase vs. construction, whether it fell under the MLI Select program or not, and whether the building’s income was stabilized. Now, CMHC has moved to a “risk-based” pricing model across all its multi-unit products. In practice, this means higher-risk loans will pay higher premiums, and lower-risk loans will pay lower ones:
- A loan with higher leverage (high Loan-to-Value) is seen as riskier and will incur a higher base premium rate than a loan with a modest LTV. In other words, the less equity (down payment) you have in the deal, the more you’ll pay in insurance.
- Construction financing is also priced higher than loans for purchasing or refinancing stabilized buildings. Building a new project or taking on a major reposition is riskier for the insurer, so those loans will see a premium bump compared to buying an existing, occupied property.
At the same time, CMHC is rolling out a new discount system within MLI Select. If your project achieves certain measurable social outcomes – affordability, accessibility, or energy efficiency improvements – you get a break on the premium. This is essentially CMHC’s way of rewarding investors who contribute to housing affordability or sustainability goals. (We’ll explain the specifics of these discounts shortly.) Importantly, CMHC has confirmed that existing premium surcharges remain in effect. So any extra fees that were tacked on before (for things like very long amortizations or unstabilized income) still apply, and in one case a new surcharge has been added (more on that below).
In sum, CMHC’s new structure ties premiums more closely to risk and reward. If you leverage higher or take on riskier projects, expect to pay more. If your project delivers positive social impacts, you can earn a discount on that premium. This approach keeps the program sustainable (CMHC has to manage its own risk and capital reserves under OSFI rules) while still encouraging development of much-needed rental housing.
Key Factors That Affect Your CMHC Premium
Let’s break down the key inputs that will determine what premium rate you’ll pay under the new MLI Select (and general multi-unit) insurance scheme. Think of these as the levers that move your insurance cost up or down:
Loan-to-Value (LTV) Ratio – How much are you borrowing relative to the property value?
LTV is now front and centre in CMHC’s pricing. The higher your LTV, the higher the base premium percentage CMHC will charge. For example, a loan at 65% LTV will have a significantly lower base premium than a loan at 85% LTV, reflecting the greater risk when you’re highly leveraged. Under the updated schedule, standard rental properties with LTVs in the ≤65% range see the lowest premiums (around the mid-2% range), which then climb as LTV increases. By the time you reach the typical maximum of 85% LTV, the base premium for a stabilized apartment building is about 5.35%.
Notably, MLI Select loans can go even higher on leverage, up to 90-95% in some cases when affordability targets are met. CMHC has special premium rates for those ultra-high LTV deals. As you’d expect, they’re the steepest: for instance, an MLI Select loan in the >90% LTV range carries a base premium around 6.15% (or 7.00% if it’s also a construction loan). In short, leverage costs more now. If you were used to a flat premium before, be prepared: that 95% LTV 5%-down deal will pay a premium at the top of the chart. CMHC’s philosophy here is clear – the more skin in the game you don’t have (i.e. higher LTV), the more they charge to insure the loan.
Loan Purpose (Purchase/Refinance vs. Construction) – What are you using the loan for?
The purpose of the loan now also affects the premium. In the new structure, CMHC distinguishes between construction financing and “all other loan purposes” (which covers acquisitions, refinances, and take-out loans on completed projects). If you’re funding a new construction or a major rehabilitation (i.e. a construction loan), expect a higher premium than if you were buying an existing building or refinancing a stabilized one.
For example, at a given LTV of, say, 80%, the base premium might be 4.35% for a purchase/refi, but 5.00% if that loan is for construction. Right across the LTV bands, construction loans carry a surcharge built into the pricing – roughly an extra 0.60% premium in many cases, based on CMHC’s published rates. This makes sense: a project under construction hasn’t proven its rents yet and carries completion risk, so CMHC charges a bit more to insure it. The takeaway for investors building new apartments is that the insurance will cost more upfront (though you also benefit from higher leverage and other CMHC perks during construction). If you’re buying an existing rental property, your base premium will be a little gentler by comparison.
Amortization Period – How long is your loan amortization, and is it above the standard 25 years?
One of the best features of MLI Select has been the ability to extend amortizations up to 40, even 50 years, significantly boosting cash flow. That hasn’t changed – you can still get those super-long amortizations – but now there’s a cost attached in the form of surcharges. Under the updated pricing, for every 5 years beyond the standard 25-year amortization, CMHC adds a 0.25% surcharge to your premium. In practical terms, if you take a 30-year amortization, that’s +0.25% on your premium. 40-year amortization? +0.75%. And if you manage to qualify for the maximum 50-year amortization (usually by scoring 100 MLI Select points), that’s +1.25% tacked on to your premium.
These amortization surcharges aren’t new per se – traditional CMHC multi-unit loans often had extra premiums for extended amortization – but what’s new is that MLI Select loans are no longer exempt. Previously, MLI Select offered a free pass on certain aspects, such as extended amortizations, allowing high-impact projects to enjoy lower premiums. Now, however, Select loans must pay these surcharges, just like regular CMHC loans. The policy rationale is consistency and risk management: if you’re stretching the loan term out (meaning the loan is riskier for longer), you contribute a bit more.
There’s also a more minor surcharge related to Effective Gross Income (EGI) for construction or unstabilized deals. If your building’s rents haven’t reached the level used in underwriting by the time of first advance (common in new builds), CMHC will add an extra 0.25% premium surcharge for “EGI not met”. It’s essentially an incentive to lease up quickly, and a bit of insurance for CMHC if the proforma income hasn’t materialized yet. The big picture: longer amortization = higher premium, and unstabilized income at funding = a touch higher premium. Plan your proforma accordingly.
Affordability, Accessibility & Energy Efficiency (MLI Select Outcome Points) – Does your project meet social/environmental goals?
This is where MLI Select’s unique point system comes into play. If you participate in the MLI Select program, you know that CMHC awards your project points based on affordability, energy efficiency, and accessibility outcomes. For instance, committing to lower rents (affordability), adding accessible units or features, or building greener (energy savings) all earn points. The more impactful your commitments – say, more affordable units or bigger energy improvements – the higher your point score, up to a maximum of 100 points in the system.
Initially, those points were mainly used to unlock financing flexibilities (higher LTVs, longer amortizations, lower debt coverage requirements, etc.). Now, CMHC has added a direct monetary incentive: a premium discount based on your point score. Essentially, if your project hits at least 50 points, you’ll get a discount on the insurance premium. There are three tiers of discounts:
- 50+ points: 10% off your premium
- 70+ points: 20% off
- 100 points: 30% off (the maximum discount)
In other words, a development that just meets the minimum Select criteria will save 10% on the CMHC premium, while a project that maxes out the social outcomes (100 points) will shave a full 30% off the insurance cost. These discounts apply after any surcharges to the total premium amount. So if your base + surcharges came to, say, 5% of the loan, and you qualified for 20% off, the final premium would be 4%.
This point-based discount system is a win-win idea: investors get rewarded for building more affordable, accessible, and green housing, and CMHC furthers its policy goals. It effectively softens the blow of the higher base premiums if you are doing the kind of project CMHC wants to encourage. Just keep in mind, you need to commit to those outcomes for a sustained period (affordable rents, etc., typically for 10+ years) to earn the points – it’s not a casual checkbox. And if you were already planning an MLI Select deal, you were likely aiming for a high score anyway. Now you can factor a nice premium reduction into your budget for scoring well.
Surcharges and Discounts: How They Work Together
With all these moving parts, let’s clarify how the premium is actually calculated now:
- Start with the Base Premium Rate. Look up the rate corresponding to your LTV and loan purpose. For example, imagine you’re at 85% LTV on a purchase of a standard apartment building – your base rate might be around 5.35% of the loan. If it were a construction loan at 85% LTV, base might be 6.00%. (CMHC provides tables of these rates for different scenarios.)
- Add Applicable Surcharges. Next, tack on any surcharges that apply. Using the same example, if you’re amortizing over 40 years, that’s +0.75% (since 40 is three increments of 5 years beyond 25). If this is a new build and you won’t have the building fully leased by first advance, add another +0.25% for the EGI-not-met surcharge. There could be other specific surcharges (for instance, loans involving non-residential components, or other special cases), but the amortization and EGI ones are the biggies most investors will encounter. At this stage, you’d have your total raw premium – say our example now sits around 6.35% (5.35 base + 1.00 in surcharges for the long amortization and lease-up risk).
- Apply MLI Select Discounts (if applicable). If your deal is an MLI Select and you’ve committed to affordability, accessibility, or green initiatives, now you get to subtract the discount you’ve earned. Suppose our example project scored 70 points – that qualifies for a 20% premium discount. We would reduce that 6.35% by 20%, which brings it down to roughly 5.08%. If the project scored the full 100 points, a 30% discount could drop the premium to around 4.45%. On the other hand, if the deal didn’t meet the minimum 50 points, no discount – you’re paying the full freight. The discount is a powerful lever: a maxed-out project can save nearly a third off the premium cost.
This layering of surcharges and discounts means the final premium can vary widely. A conservative deal (low LTV, shorter amortization) with no frills might pay a very modest premium, while an aggressive, high-leverage deal could see a hefty premium before discounts. For instance, industry analysts have noted that a 95% LTV project with a 50-year amortization (enabled by 100 Select points) saw its effective premium jump from about 2.5% under the old system to over 5% under the new one – roughly double. That was an extreme-case scenario, but it illustrates the impact: if you’re pushing leverage to the max, be prepared for a much higher insurance bill than you may have expected previously. On the flip side, if you’re delivering on affordability or green building, you get a chunk of that bill knocked off. As one Toronto brokerage summed it up, “the greater the leverage and exposure, the greater the premium charge” under these new rules. It’s all about balancing risk and reward.
Calculating the Premium and Your Total Mortgage Cost
Now for the practical part: How do you actually calculate the CMHC premium, and what does it mean for your deal’s bottom line? Don’t worry – you won’t need to break out advanced math, but you will need to understand the steps (or have a handy calculator tool).
First, the premium is expressed as a percentage of your loan amount. Once you determine the final percentage using the process above, you apply it to the total loan. For example, if after surcharges and discounts you end up with a 5% premium and your loan is $5 million, the premium is $250,000. This is a one-time insurance fee.
CMHC allows this premium to be added (capitalized) onto your mortgage, and most investors choose to do so. In our example, instead of bringing $250k extra cash to closing, you’d roll it into the loan, ending up with a ~$5.25 million insured mortgage. Your monthly payments will then be based on that slightly higher balance. Yes, that means you’ll pay interest on the premium over time – but it often barely moves the needle on the monthly payment, especially with a long amortization. And remember, the whole reason you’re paying this premium is to get benefits like a lower interest rate, higher LTV, and longer term. Those advantages can dramatically improve your cash flow and ROI. In fact, CMHC pointed out that even with the new premiums, a typical MLI Select deal can save an investor around 12% on monthly mortgage payments versus a conventional loan, plus massively lower the equity needed upfront. In other words, the cost of the premium may be more than offset by the financing gains you get.
To truly understand the impact on your specific project, you’ll want to run the numbers. This means plugging in the new premium rates and seeing how your mortgage constants and cash yields look with the slightly higher loan amount. It’s wise to build this into your pro forma (e.g. as a line item for financing cost) so there are no surprises. The new structure is a bit more complex than the old one, so if you have a spreadsheet or tool that can calculate CMHC premiums given LTV, amortization, and MLI Select points, that will save you a lot of time. (We have such a tool – more on that in a moment.)
A quick tip: When comparing financing options, don’t just look at the premium in isolation. Consider the total cost of financing. With CMHC, that includes the premium but also the reduced interest rate and smaller down payment. Often, the all-in cost (premium + interest over time + opportunity cost of equity) still leans in favour of CMHC-insured loans, especially for long-term holders of multi-family assets. The new premiums will eat into that advantage slightly, but for many investors, CMHC financing remains the gold standard for maximizing leverage safely. It just requires a bit more finesse now in the budgeting stage.
Ready to Plan Your Next Investment?
The bottom line: CMHC’s new MLI Select pricing rewards thoughtful, impactful investments – but it also demands careful planning. As an investor, you’ll need to budget for higher insurance costs on highly leveraged or extended-term loans, and take advantage of the discounts if you can. It’s more important than ever to analyse your deal’s numbers with these premiums in mind.
Our team is here to help you navigate these changes. Feel free to reach out for a one-on-one consultation – we can walk you through how the new CMHC rules would affect your specific project and financing strategy. We’ve also developed a free proforma Excel tool that incorporates the latest CMHC premium rates, surcharges, and discounts. Download it today to run scenarios on your own and see the complete picture of your mortgage costs with CMHC.
As always, knowledge is power in real estate investing. With CMHC’s new pricing in effect, savvy investors will adapt and find the opportunities hidden in the fine print. Whether you’re structuring a 12-unit acquisition or a 100-unit development, understanding these insurance premiums is key to optimizing your returns. Let’s chat about your investment goals and how we can make the most of CMHC’s programs in this new landscape. Please book a consultation or grab our free calculator now, and let’s build your multi-family portfolio with confidence under the new rules. Happy investing!
Sources:
CMHC News Release cmhc-schl.gc.ca;
CMLS Mortgage Update cmls.ca;
Oakbank Capital Analysis oakbankcapital.com;
Canadian Mortgage Professional mpamag.com;
CMHC Official Data cmhc-schl.gc.ca.
