Rental Construction Financing

The Rental Construction Financing initiative provides low-cost loans to encourage the construction of rental housing across Canada. It supports sustainable apartment projects in areas where there is a need for additional rental supply. The initiative has a total of $13.75 billion in available loans, and is open from 2017 to the end of 2027.

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 and student housing.

Projects situated on a reserve may be eligible for financing if the borrower can demonstrate that enforceable security over the lands can be granted to CMHC.

Note: To learn about funding for niche housing types such as retirement homes, single room occupancy, student housing and supportive housing, we invite you to visit Rental Housing Solutions for more information.

The loan offers:

• a 10-year term (closed to pre-payment) and a fixed interest rate locked in at first advance for certainty during the most risky periods of development
• up to a 50-year amortization period
• CMHC mortgage loan insurance that is effective from first draw and for the duration of the amortization period to simplify loan renewal. The borrower does not pay the premium, only the PST if applicable
• 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 only payments financed by the loan during construction through to occupancy permit
• principal and interest payments are due after 12 months of stabilized effective gross income

Download the product highlight sheet for complete loan characteristics.

Please note: at the end of the term, the applicant is responsible to arrange take-out financing with a CMHC Approved Lender.

All projects must

• have at least 5 rental units
• have a loan size of at least $1 million
• respond to a need for rental supply
• have zoning in place, a site plan in process with municipality and a building permit available. The first construction draw must be within 6 months of date of the executed loan agreement
• meet minimum financial viability and social outcome requirements described below

Financial viability requirements

You must have the financial and operational ability to carry the project without ongoing operating subsidies. This includes the capacity to deal with development risks such as cost overruns, delays in construction and lease-up.

Projects must meet the minimum debt coverage ratio (DCR) requirements. Contact your CMHC representative to get an interest rate stress test of 100 bps over the indicative rate.

Social Outcome 1: Affordability requirements

You must meet one of the following affordability requirements criteria.

Criteria A:

• The total residential rental income must be at least 10% below its gross achievable residential rental income. This must be supported by an independent appraisal report.
• At least 20% of units must have rents at or below 30% of the median total income for all families for the area.
• Affordability must be maintained for at least 10 years from date of first occupancy

Criteria B:

• The affordability requirement may be met if the proposal has been approved under another affordable housing program or initiative (federal, provincial, territorial or municipal). This can include capital grants, municipal concessions or expedited planning processing.
• Affordability must be maintained for at least 10 years from date of first occupancy

Social Outcome 2: Energy-efficiency requirements

Projects must decrease energy use and greenhouse gas emissions. Both must be 15% below the 2015 National Energy Code for Buildings or the 2015 National Building Code at minimum.

If we advance your application to the underwriting stage, we will require a confirmation of the energy efficiency and emissions levels by a qualified energy professional. See Appendix B of the Required Documentation fact sheet.

Social outcome 3: Accessibility requirements

At least 10% of the project’s units must meet or exceed accessibility standards as regulated by local codes. In addition, access to the project and all common areas must be barrier-free as regulated by the local codes or the 2015 National Building Code. See Appendix A of the Required Documentation fact sheet.

Download the eligibility and requirements details.

We accept applications on a continuous basis. We will notify you of the end-date of the current 30-day prioritization window after we review your application. We will inform you within 5 business days of the end of this window whether your application was selected for underwriting, retained for the next prioritization window or declined.

Selected applications are subject to approval based on an underwriting assessment of the borrower, the property and the market. CMLS Financial has been contracted to complete the underwriting assessment on CMHC’s behalf.

RCFi Application Process

Prioritization of applications

The RCFi looks to prioritize projects that:

• Meet or exceed the mandatory minimum requirements for financial viability, affordability, energy efficiency and accessibility
• Demonstrate greater social outcomes that contribute to vibrant, socially inclusive neighborhoods and
• Address a need for supply in the market

Your project’s assessment from the Social Outcome Grid will also assist in determining your projects’ loan-to-cost ratio.

Documentation requirements

The required documentation provides the minimum information and documentation required when an application is selected for underwriting and before final credit approval.

Application fees

Once your application has been selected for an underwriting assessment, the following fees will be required:

Residential portion:

• $200/unit for the first 100 units
• $100/unit for subsequent units
• up to maximum of $55,000 for the residential portion of the application fees

Non-residential portion:

• 0.30% of the non-residential loan amount if it exceeds $100,000
• If your application is declined or withdrawn, we will retain a portion of the fees (minimum 10%) for the underwriting work rendered. Once CMHC has issued a commitment Letter of Intent, no refund will be available, even if the loan is not advanced.

Rental Construction Social Outcome Grid (XLSM)

This tool will help you look at various scenarios. It will provide information regarding the proposed project such as costs, financing and sources of equity. It will also help you determine if your project meets the mandatory minimum requirements for financial viability, affordability, energy efficiency and accessibility.

Applications are scored on additional criteria linked to social outcomes.

For reference:

• NHS RCFi Product Highlight Sheet
• RCFi Application Process
• RCFi Required Documentation

Learn more about resource-efficient homes, accessible and adaptable housing

For help in completing your application, contact your Affordable Housing Specialist. They can help you understand and assess your needs, identify possible solutions, provide information on how CMHC can support your goals and help you navigate our application process.

General inquiries about the NHS or technical support

• Phone: 1-800-668-2642 - Business hours 8:00 a.m. to 7:00 p.m. ET
• Email:  contactcentre@cmhc.ca.

Mailing address:

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