Insured Loans secured by a Ministerial Loan Guarantee
How Can the Program Help First Nations?
The program may assist Band Councils or First Nation members living on-reserve in accessing financing for the construction, purchase and/or renovation of single-family homes or multiple residential rental properties.
Who is Eligible?
To be eligible, a borrower must:
- have a Certificate of Possession or have been granted use of the land by the First Nation
- satisfy the minimum requirements for taking out a loan with an Approved Lender and be able to support repayment of the loan
- for homebuyers (1 to 4 unit owner-occupied properties): have savings or an Indigenous and Northern Affairs Canada (INAC) contribution; a minimum 5% of the lending value or approved costs of the house (for example, if the cost to build your house is $90,000, you must have at least $4500 as a down payment)
- for rental investors (1 to 4 unit non owner-occupied properties): have a minimum downpayment of 20% of the lending value. CMHC-insured loans are available for qualified rental loans for up to a maximum of 80% of the lending value.
- for rental projects (5+ units): have a minimum down payment of 15% of the lending value. CMHC insured loans are available for qualified rental projects for up to a maximum of 85% of the lending value.
- The maximum amortization is 25 years.
How Does it Work?
CMHC provides loan insurance to the Approved Lender (banks, Aboriginal Capital Corporations, credit unions, etc) to make loans on residential homes or projects located on-reserve.
- Security for the loan is made by a loan agreement with the Approved Lender, secured by a Band Council Resolution and a Ministerial Loan Guarantee obtained through INAC. If the agreed repayment of the loan is not made, the outstanding balance is paid out to the Approved Lender through the Ministerial Guarantee by INAC on behalf of the applicant. INAC will then require repayment from the Band.
- The Approved Lender works with the borrower in preparing the application package, and when complete, submits the application to CMHC for approval.
- The loan application process is carried out with the help of the Band Council who can assist in obtaining the necessary approvals.
Where Can I get More Information?