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.

Eligibility

Loans are available for:

  • municipalities
  • private sector developers and builders
  • non-profit housing providers

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.

Loan details

The loans offer:

  • a 10-year fixed-term  for certainty during the most risky periods of development. The loan is closed to prepayment.
  • up to a 50-year amortization period for smaller monthly payments and long-term viability
  • CMHC mortgage loan insurance for the full duration of the amortization period with the premium not payable by the borrower*
  • up to 100% loan to cost for residential space and up to 75% loan to cost for non-residential space, depending on the strength of the application.
  • interest payments only during the construction and rent-up phase — principal payments begin after 1 year of stable effective gross income

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.

Criteria

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.
Social Outcome Grid (.XLSM)

  • Financial viability
    You must show that the project is financially viable. You must also show that you have the financial and operational ability to carry the project without ongoing operating subsidies. This includes your capacity to deal with development risks such as cost overruns and delays in construction.
  • Affordability
    Total residential rental income must be at least 10% below its potential rental income as supported by an appraisal report. A minimum of 20% of units must have rents at or below 30% of the median household income in the subject market.

    Your project may also meet our affordability requirements if another municipal, provincial/territorial or federal affordable rental program has approved it. For example, approvals for capital grants, municipal concessions or expedited planning processing may qualify. Contact us to discuss this further.

    Projects must maintain affordability for at least 10 years after the date of first occupancy.
  • Energy efficiency
    All projects must achieve a minimum 15% decrease in energy use and greenhouse gas emissions relative to the 2015 model building codes (the 2015 National Energy Code for Buildings or the 2015 National Building Code). Energy Efficiency and GHG emissions reduction design proposals prepared by a qualified energy professional will be required.
  • Accessibility
    At least 10% of the project’s units must meet or exceed accessibility standards for the municipality, province or territory and the 2015 National Building Code accessibility standards. In addition, access to the project and all common areas must be barrier-free.

Approval process

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.

Resources

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.
Download and complete your Rental Construction Financing Social Outcome Grid (.XLSM)

Energy efficiency

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.
Resource-efficient homes

Accessibility

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.
Accessible and adaptable housing

FAQ

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:

For the first 100 units $200 per unit
Subsequent units $100 per unit up to a maximum of $55,000
Additional Fees for non-residential components (where the loan amount relating to the non-residential components exceeds $100,000) 0.30% of the non-residential loan amount*

* 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.

Contact

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)

Mailing address:

Canada Mortgage and Housing Corporation
Attention: Rental Construction Financing
700 Montreal Road
Ottawa, Ontario
K1A 0P7

CMHC representatives by region

Paula Gasparro

Paula Gasparro

416-250-2731
pgasparr@cmhc.ca

Region: Ontario

Krissy Fry

Krissy Fry

902-426-0989
kfry@cmhc.ca

Region: Atlantic

Jessica Harland

Jessica Harland

403-515-2943
jharland@cmhc.ca

Region: Prairies

Robyn Adamache

Robyn Adamache

604-737-4161
radamach@cmhc.ca

Region: B.C.

Giovanni De Benedictis

514-283-0203
gdebened@cmhc.ca

Region: Quebec

Submit your loan application

Download and complete the Social Outcome Grid (.XLSM) to submit with your application.

Tell us about yourself

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Tell us about your project

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Zoning compliant?
Site plan approval completed?
Property title
Project permit in process with the city?
Current as-built appraisal completed?
Current market feasibility completed?
Cost consultant review of budget?
Environmental report completed?
Terms and conditions

By submitting an application for a loan under ‘Rental Construction Financing, the Applicant hereby acknowledges and agrees to the following terms and conditions.

  1. Additional information regarding the project will be required, and the Applicant agrees to provide such information on or before the date(s) specified in writing by or on behalf of CMHC. There is no obligation to provide the requested information but failure to do so may prevent CMHC from considering the application.
  2. If the Applicant is selected by CMHC to receive a loan, agreements that set out the terms and conditions of the loan must be entered into with CMHC. The agreements will specify, among other things, the amount to be advanced to the Applicant. The granting of a loan or any part thereof or approval for insurance by CMHC is not to be construed or relied on by the Applicant or any other party as representing a confirmation of the value or condition of the underlying property, whether or not appraisals or inspections are carried out by or for CMHC; nor is it to be construed or relied on by the applicant or any other party as representing a confirmation of the borrower(s) and any guarantor(s) ability to pay the loan.
  3. All applications shall become the property of CMHC upon submission and CMHC shall have intellectual property rights in the application and other submitted materials. The application and any other submitted materials will not be returned to the Applicant. The Applicant is not entitled to any compensation for any work related to, or materials supplied in connection with the application. The Applicant represents and warrants to CMHC that all rights necessary to satisfy this requirement have been obtained and that it has waived, or has obtained a waiver in favour of CMHC, of all moral rights in the application and related materials, and hereby assigns all rights in the application and materials, as provided for in the law of copyright. If requested by CMHC, the Applicant will execute documentation to further acknowledge CMHC’s ownership of the material and the waiver of moral rights.

    All information regarding the terms and conditions, financial and/or technical aspects of the Applicant’s proposal of which are proprietary or confidential nature submitted to CMHC have been and will be marked “PROPRIETARY” or “CONFIDENTIAL”. Proprietary and confidential markings shall be included beside each item or at the top of each page containing information that the Applicant wishes to protect from disclosure. CMHC will make all reasonable efforts to protect the Applicant’s documents and information so marked from disclosure. Notwithstanding the foregoing, CMHC shall have no liability of any kind to the Applicant, or any other party, based on inadvertent or unintentional disclosure of proprietary information. The Applicant has been advised that as a Crown Corporation, CMHC is subject to federal legislation including the Access to Information Act and the Privacy Act. In certain specific circumstances, information submitted to CMHC by the Applicant may be required to be disclosed pursuant to federal legislation. In such cases, to the extent reasonably possible, CMHC will make efforts to advise the Applicant of the required disclosure prior to releasing the information.
  4. The Applicant agrees that the information submitted to or obtained by CMHC in connection with an application or a loan may be used and exchanged for the following purposes: (i) to consider its eligibility for the loan requested; (ii) for any purpose related to the provision of mortgage insurance generally; (iii) for evaluation of ‘Rental Construction Financing’; (iv) for use by CMHC and the Government of Canada for any purpose related to the National Housing Act (Canada); and (v) to protect CMHC from errors and fraud. Each of CMHC and others engaged by CMHC to administer ‘Rental Construction Financing’ is authorized to process and store such information and make it available to CMHC employees, and others engaged by CMHC, for the purposes of assessing the Applicant’s eligibility for the loan requested, the administration of ‘Rental Construction Financing’ and the collection of analytics. If any of the information changes or becomes inaccurate, the Applicant must promptly notify CMHC of the change.
  5. If the Applicant is selected by CMHC to receive a loan, CMHC shall have the right to publicize details of the housing project, the funding assistance and the name of the successful Applicant, in accordance with CMHC's obligations as a Canadian Crown Corporation. By submitting this application, the Applicant confirms its consent to the disclosure of this information. The Applicant is not permitted to make any announcement regarding the Rental Construction Financing initiative, including without limitation, any funding without the express written consent of CMHC.
  6. CMHC and any other person engaged by CMHC is each authorized to (i) contact any person listed in this application to consider the Applicant’s eligibility for the loan requested or in connection with the administration of ‘Rental Construction Financing’ and may send you information by email; and (ii) make any inquiries required, including obtaining corporate and business information, to assess this application for a loan.

If you have any questions or concerns please contact the Financing Initiative team.

Canada

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