Has anyone in Canada use CMHC financing for multi family res? Exploring options on a couple projects and not familiar with the programs
I’m looking at getting CMHC financing on a mid size multi family res project. I hear programs are changing next year and wondering how difficult it is to get financing through this program.
[{"id": "hol1hfo", "text": "I have bought a duplex with CMHC. Multi familys are eligible. The max cost would be up to 1 million. \n\nTalking to a broker would be your best bet to find out if there are any restrictions.", "replies": [], "depth": 1}, {"id": "holos9h", "text": "Unless the rules have changed in the last few months, there is no 1mm cap on the purchase price or loan size.\n\nI've done few CMHC loans in the mid 7 figure range in the last few years and I'll summarize the pro's and con's briefly.\n\nPro's:\n\n\\- Very low rates.  Until recently they were sub 2% for 5 year fixed term and 2% ish for 10 year.  I think they have gone a up a bit, bit still in the low 2's.\n\n\\- High LTV.  I think they go up to 80 or 85% for multi-family depending on the category.  The premium is higher though which brings me to the cons.\n\nCon's:\n\n\\- The premium is pretty high as you up your LTV.  If you spread it out over the term of the loan, it's still very favourable compared to conventional mortgages.\n\n\\- CMHC does their own valuation calculations and it may not be in line with a market appraisal.  They use a multi-year rolling average for cap rates and vacancy rates which may not accurately reflect an area that has seen rapid growth recently.  I was in a market that had been dead for years and I bought just before the boom.  CMHC was still using 15% vacancy rates and a 12% cap to value my building even though the town's vacancy rate was 0.  Unofficially you can make up for some of this in some markets by juicing your numbers a bit, knowing that CMHC will be extra conservative.\n\n\\- \"Skin in the game.\"  I'm not a finance guy so I don't know the term for this, but CMHC will look at your equity in the building after a repositioning, and will make sure you can't take all your equity out regardless of whether or not your loan would still meet LTV, DSCR etc standards.  Once again, you can mitigate this somewhat by creative accounting.\n\n\\- Time.  This is the big one.  I've heard that recently it can be 4-6 months from application to funding, making it a non-starter for purchase financing.", "replies": [], "depth": 1}]