CMHC is best known as an insurer of existing single-family homes, apartments and retirement homes/nursing homes. However, CMHC also offers to insure residential construction loans, specifically the following:
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Condominiums for sale
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Freehold properties for sale (single family home developments, townhouses etc.)
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Apartments/condominiums to be built for rental purposes
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Retirement & Nursing home developments
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Mixed use property development, where the residential component represents at least 80% of the overall project.
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We have structured some of the largest CMHC-insured construction loans. The senior partners at CMCC have extensive construction lending experience, both in structuring loans with traditional lenders (on a conventional basis) and with CMHC (on an insured basis). As a 'CMHC Approved Lender', we will negotiate the terms of the construction loan directly with CMHC to ensure that your needs are met.
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Financing Terms Available:
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Interest Rate & Fees
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the interest rate, which can be obtained from a lender on a CMHC-insured deal, will be well below the prime rate of interest. The interest rate will normally be 1.0%-2.0% lower than for conventional financing and the fees will be nominal.
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Loan Amount
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the loan amount is limited to (i) 75% of the total sales value of the units being sold, or (ii) 85% of the value of the development at full lease-up (if a rental project).
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Presales Level for Condominiums
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the presales threshold for a condominium project is generally 50%-65% of total sales. Unlike some of the conventional lenders, CMHC does not require a presales amount which guarantees full repayment of the authorized loan amount.
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Underwriting
on New Rental Construction Loans
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CMHC is the 'lender' of choice on new rental construction loans and retirement and nursing home developments. Traditional lenders have difficulty underwriting the high rental rates associated with new rental developments.
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CMHC'S Fee Structure:
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The fees are outlined below:
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CMHC Application Fees - upfront fee of $200 per unit for the first 100 units and a fee of $150/unit for any additional amount.
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CMHC Mortgage Insurance Premium (MIP) - a mortgage insurance premium, which is only paid on the amount of each draw. Please note that the 'loan to value' is calculated for residential condominiums based on the aggregate proceeds from sale to individual purchasers (and is not based on the project cost).
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Residential Condominiums
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Max. Loan to Value - Up to 75.0% of Loan to Value MIP - 1.25% on the amount drawn
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New Rental Apartments*
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Max. Loan to Value - Up to 85% of Loan to Value MIP - 2.25% to 5.0% (increases as the loan to value escalates)
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New Rental Retirement Nursing Homes*
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Max. Loan to Value - Up to 85% of Loan to Value MIP - 3.25% to 6.0% (increases as the loan to value escalates)
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* Please note that for 'new rental' loans, the CMHC insurance policy is valid for both the construction period and for 25-40 years after completion.
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