CMHC Mult-Unit New Construction

2 Replies

Hello great BP people of Canada!

I'm reading this info from CMHC and wondering what a specific line means. (This could be a dumb question)

Source: https://www.cmhc-schl.gc.ca/en/hoficlincl/moloin/m...

"Loan-to-Value Ratio Up to 85% or 100% of cost, whichever amount is less. "

It doesn't mention 100% anywhere else.   But could this imply that a 100% loan is possible on new construction?   Again, it just struck me a funny, but maybe I just don't fully understand what they mean.

@Doug Keefe

Hello from the Big Island ;-)

That line means that CMHC will allow an LTV of 85% of the {appraised} value of the building or 100% of the construction cost (for new buildings) whichever is lower.

It's basically saying if you spend $1,000,000.00 to build a 12-unit building, but it appraises for $800K in the present market, that CMHC will insure a loan principal up to 680K {provided the deal qualifies for the 85% LTV ... many only qualify for 75 - 80%}.

Conversely, if you built a 12-unit building at a cost of 600K, but it appraised at 800K, CMHC would only insure a loan principal up to 600K.