CMHC-Insured Multi-Residential Financing

April 28 , 2015

Financing for multi-unit (5+ unit) residential buildings comes in two varieties:

  • CMHC Insured
  • Non-CMHC Insured

People with healthy down payments frequently ask why they’d ever want to pay the CMHC premium if they can simply get a conventional mortgage.

Let’s take a $500,000 loan at 75% LTV, for example, on a 5-unit building.  CMHC’s premium is 2.25% for a 25-year amortization.  That’s $11,250—not exactly chicken feed.

But here’s the thing.  Lenders consider multi-unit financing to be much safer when it’s insured.  That means there’s less of a risk premium and borrowers get better rates on CMHC-backed deals.  “There is a 200 basis point difference between that and a conventional loan,” First National’s, Jeremy Wedgebury, told

What many don’t realize is that this 2% rate differential translates into big dollars.  On that same $500,000 mortgage, a 2% lower 5-year rate would save almost $34,000 after accounting for the $11,250 premium and CMHC’s $750 application fee.  Moreover, the property cash flows better because the payment is 16% lower.

In sum, with multi-unit apartments, “pay to save” is often a good motto.