Rental Construction Financing
The Rental Construction Financing initiative (RCFi) provides lower-cost loans to encourage the construction of rental housing across Canada, where the need for supply of rental is clearly demonstrated. It will provide up to $2.5 billion in loans over the 4 years starting in 2017.
Loans are available for:
The initiative focuses on standard apartment projects in Canada with general occupants. It does not support construction of niche housing types such as retirement homes, single room occupancy, student housing and equity co-ops, nor construction of supportive housing or housing with tenancy restrictions.
First construction draw must be within 6 month of the approval of the loan agreement.
The loans offer:
At the end of the 10-year loan term, the applicant will need to arrange re-financing with a CMHC Approved Lender to pay the outstanding balance. There is a $1 million minimum loan amount for each project and a minimum of 5 rental units must be created to qualify for the loan.*PST (as applicable) is payable by the borrower.
Applications must meet the following minimum mandatory requirements. Each project is assessed on how much it exceeds the minimum requirements for affordability, energy efficiency and accessibility. This social outcome assessment assists in determining the possible loan size and prioritization.
The submission of online applications will be continuous for 4 years starting in 2017. Commitments are staggered throughout each year.
Once you submit your online application, we will review it. If your application does not meet the mandatory eligibility requirements or is not selected, we may suggest other CMHC products as possible alternatives.
Selected applications are subject to approval based on an underwriting assessment of the borrower, property/project and market. Applicants will work with a CMHC-appointed service provider, CMLS, to complete all aspects of the underwriting process.
Your project’s assessment on the social outcomes grid will assist in determining your underwriting prioritization and maximum loan amount. Other factors used to prioritize applications include shovel readiness, local need for further supply, geographic concentration of projects, borrower exposure and financial viability.
We will notify you with the date of the end of the current prioritization window (60 day maximum from the submission of the application). After the close of the prioritization window, you will be informed of whether your application was selected for underwriting, pushed to the next prioritization window or rejected.
Please note that we only consider applications that meet the mandatory eligibility requirements.
Rental Construction Financing Social Outcome Grid
This tool will help you look at various scenarios by providing some information regarding the proposed project such as costs, financing and sources of equity. The tool will also help you determine if your project meets the mandatory minimum requirements for financial viability, affordability, energy efficiency, and accessibility. In addition to these mandatory requirements, applications will be scored on additional criteria linked to social outcomes. Although a more detailed underwriting will be required when an application is formally submitted, this will give you sufficient information to explore different options.
You must demonstrate how your project will achieve a minimum 15% decrease in energy intensity and Greenhouse Gas (GHG) emissions relative to similar projects constructed to the 2015 National Energy Code for Buildings or the 2015 National Building Code.
At least 10% of units within the project must meet or exceed the local accessibility standards of the municipality, Province or Territory, and the accessibility requirements of the 2015 National Building Code.
What does the financing initiative provide housing developers?
It will provide lower-cost construction loans that will be approved for 10 year terms providing cost predictability during the earliest stage of rental development. In addition, loans through the financing initiative include CMHC mortgage loan insurance. This will simplify the loan renewal throughout the life of the mortgage.
What is the maximum loan amount that an applicant can request?
The financing initiative will prioritize projects that demonstrate greater social outcomes and will potentially offer a loan for up to 100% of the cost of these projects.
Why does the Rental Construction Financing initiative have social outcome eligibility criteria?
The eligibility criteria of project viability, affordability, accessibility, and energy efficiency are to ensure that the subject residential rental property is self-sustaining without government subsidy and that it positively contributes to a vibrant, socially inclusive, neighborhood.
Is there a fee for applying to the Rental Construction Financing initiative?
Yes. Once we have reviewed the initial application, the following fees will be required for the Rental Construction Financing application to proceed to the underwriting assessment:
* In addition to the $55,000 maximum per loan.
If the Rental Construction Financing loan is approved and funded, the application fee is credited back to the borrower through a reduction in the loan interest rate.
What happens to the application fee if my application is declined or withdrawn?
If your application is declined by CMHC or is withdrawn (after the underwriting assessment has begun) CMHC will retain a portion of the application fee for work rendered thus far. A minimum of 10 percent of the application fee will be retained. Once a commitment letter is issued, the fee is deemed to have been fully earned by CMHC and will not be refunded even if the loan is not advanced.
Could a project receive additional funding assistance?
Proponents may apply for other CMHC products, programs or services and if approved this additional assistance can form part of the loan application to the Rental Construction Financing. Projects can also leverage other government housing programs or initiatives to improve project feasibility and affordability however it is a requirement that the project must be financially viable without ongoing operating subsidies to the borrower.
Are provinces and territories eligible for financing?
The financing initiative was not specifically designed to target provinces and territories as borrowers or delivery partners for new construction as these entities benefit directly from the Federal Government’s Investment in Affordable Housing (IAH) funding.
Are on-reserve groups eligible for financing?
Projects situated on a reserve could be eligible for financing provided that the borrower is able to demonstrate that enforceable security over the lands can be granted to CMHC. New rental housing projects off-reserve would be eligible.
For more information or help with your application, speak to your CMHC representative or contact the Rental Construction Financing team.
Phone: 1-800-668-2642 (8 a.m. to 7 p.m. ET)
CMHC representatives by region
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