How New CMHC Premiums Impact Your Pro Forma and Project Choices
September 5, 2025
By Allwyn Dsouza, Senior Analyst, Research and Insights, REIC/ICI
By Allwyn Dsouza, Senior Analyst, Research and Insights, REIC/ICI
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On July 14, 2025, Canada Mortgage and Housing Corporation (CMHC) introduced a new, simplified way to price mortgage insurance for multi-unit housing. Every product—including MLI Select—now follows one standardized premium grid. Prices vary by three factors: the loan-to-value (LTV) ratio, the loan’s purpose (construction versus purchase/refinance), and the building type (standard rental versus student, seniors, or supportive housing)[1]. CMHC paired the grid with clear MLI Select discounts of 10%, 20%, or 30%, applied after any surcharges.
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Why the change? CMHC says the update better reflects risk and the capital it must hold, aligning with the Office of the Superintendent of Financial Institutions’ (OSFI) MICAT rules that fully take effect in 2026[2].
What it means in practice: most standard rental projects at ≤85% LTV remain financially workable under the new pricing. Construction loans, higher-LTV terms, and specialized assets (student, seniors, supportive) will face higher costs unless they qualify for strong MLI Select discounts—typically 20–30%—by meeting affordability, energy, and accessibility targets.
What changed—and why it matters
What it means in practice: most standard rental projects at ≤85% LTV remain financially workable under the new pricing. Construction loans, higher-LTV terms, and specialized assets (student, seniors, supportive) will face higher costs unless they qualify for strong MLI Select discounts—typically 20–30%—by meeting affordability, energy, and accessibility targets.
What changed—and why it matters
- One grid for everyone. CMHC has standardized multi-unit (MU) insurance premiums. Prices now rise in a clear way with higher loan-to-value (LTV), with construction loans priced above purchases/refinances, and by building type (Standard Rental vs. Student/Seniors/Supportive). The new grid applies to applications submitted on or after July 14, 2025.
- Clear MLI Select discounts. Projects that meet MLI Select targets earn 10% (≥50 points), 20% (≥70 points), or 30% (≥100 points) off the premium. The discount is taken after any surcharges, so points are especially valuable when you have long-amortizations, non-residential space, or a term loan during lease-up (when required income hasn’t been reached at first advance). Compared with the earlier regime, today’s system is clearer and more formulaic—and points are worth more on files with surcharges because the 10/20/30% cut applies to the whole premium stack (base + surcharges), not just a standalone Select table.
- Aligned with capital rules. OSFI’s MICAT 2025 framework increases the capital insurers must hold for riskier loans starting January 1, 2026. Expect higher premiums for very high-LTV and specialized housing (student, seniors, supportive), and relatively lower premiums for lower-LTV standard rentals.
- Holdbacks eased for standard loans. Separately, for MLI Market (standard) submissions from July 3, 2025, CMHC removed rental-achievement holdbacks, allowing advances of up to 85% of the loan amount during construction (MLI Select remains case-by-case). This reduces working-capital pressure for many rental projects[3].
The new price cards
Table 1.0: Standard Rental Housing — Base premiums (%)
Table 1.0: Standard Rental Housing — Base premiums (%)
| Product | LTV bucket | Construction | All other loan purposes |
|---|---|---|---|
| MLI Market and MLI Select | ≤65% | 3.25 | 2.60 |
| ≤70% | 3.75 | 2.85 | |
| ≤75% | 4.25 | 3.35 | |
| ≤80% | 5.00 | 4.35 | |
| ≤85% | 6.00 | 5.35 | |
| MLI Select Only | ≤90% | 6.75 | 5.90 |
| >90% | 7.00 | 6.15 | |
Table 2.0 All other Shelter Models (student, seniors, SRO/supportive) - Base premiums (%)
| Product | LTV bucket | Construction | All other loan purposes |
|---|---|---|---|
| MLI Market and MLI Select | ≤65% | 6.55 | 6.30 |
| ≤70% | 6.85 | 6.60 | |
| ≤75% | 7.15 | 6.90 | |
| ≤80% | 7.30 | 7.05 | |
| ≤85% | 8.00 | 7.75 | |
| MLI Select Only | ≤90% | 8.25 | 8.00 |
| >90% | 9.00 | 8.75 | |
Source: CMHC
Surcharges (stack before the Select discount):
- Amortization: +0.25% per 5 years beyond 25 (e.g., 35y = +0.50%; 40y = +0.75%).
- Non-residential space: +1.00% on the portion attributable to non-residential.
- Second mortgage: +0.50% (on outstanding balance of the first).
- EGI not met at first advance: +0.25% (not applicable to construction).
Table 3.0 MLI Select discount schedule (applied to base + surcharges):
| Points | Discount |
|---|---|
| Min. 50 points | 10% |
| Min. 75 points | 20% |
| Min. 100 points | 30% |
Source: CMHC
We computed the premiums for a set 504 combinations and analyzed the dataset.
Here’s the universe we tested, strictly for MLI Select:
Below are some of the sample computations.
A) Standard rental | Construction | 80% LTV | 40-year amort. | 70 points (Select)
B) Standard rental | Term (purchase/refinance) | 85% LTV | 100 points (Select)
C) Student housing | Term | 80% LTV | 70 points (Select)
Across all 504 combinations, the average change is +1.8 percentage points (pp) in the effective premium (median +2.11 pp). In other words, on average the new regime is higher, but there are meaningful pockets where it’s lower.
Here’s the universe we tested, strictly for MLI Select:
- Shelter type (2): Standard Rental; Other Shelter Models (student/seniors/supportive)
- Purpose (2): Construction; Term (purchase/refinance)
- LTV buckets (7): ≤65%, ≤70%, ≤75%, ≤80%, ≤85%, ≤90% (Select only), >90% (Select only)
- Select points (3): 50, 70, 100
- Amortization (4): 25, 30, 35, 40 years
- EGI status (Term only, 2): Met, Not Met (construction has no EGI surcharge)
Below are some of the sample computations.
A) Standard rental | Construction | 80% LTV | 40-year amort. | 70 points (Select)
- Base (construction ≤80%): 5.00%
- Amortization surcharge: +0.75% (40 yrs) → 5.75%
- Select discount @70 points (20%): ×0.80 → 4.60% effective premium.
B) Standard rental | Term (purchase/refinance) | 85% LTV | 100 points (Select)
- Base (term ≤85%): 5.35%
- No EGI surcharge (rents met) → 5.35%
- Select discount @100 points (30%): ×0.70 → 3.745% effective premium.
C) Student housing | Term | 80% LTV | 70 points (Select)
- Base (other-shelter term ≤80%): 7.05%
- No surcharges → 7.05%
- Select discount @70 points (20%): ×0.80 → 5.64% effective premium.
Across all 504 combinations, the average change is +1.8 percentage points (pp) in the effective premium (median +2.11 pp). In other words, on average the new regime is higher, but there are meaningful pockets where it’s lower.
Figure 1.0
Source: REIC Analysis
Figure 2.0: Distribution of premium delta across cases analyzed
Source: REIC Analysis
Figure 3.0: Distribution of % change in premium vs. old regime across cases analyzed
Across the 504 combinations, premiums rise sharply by ~49% on average and as high as 158% in a select few cases. The biggest jumps (up to +158%) cluster at ≥80% LTV, construction, long amortizations, and “Other Shelter Models,” where higher bases dominate even after Select discounts. Meaning, sponsors should budget wider contingencies, prioritize points that unlock 20–30% discounts, right-size leverage to drop an LTV bucket, and time take-outs to avoid EGI-not-met surcharges and lender friction.
What this means in dollars and monthly payments
Premiums are usually capitalized into the mortgage, so the change affects:
A clear, realistic example many readers recognize:
Standard Rental — TERM, 85% LTV, 100 points (Select)
On a $50M loan (premium capitalized), that’s +$597,500 (25 yr case) to +$860,000 (40 yr case) extra premium financed. At a 5.25% coupon, the monthly payment rises by about +$3.0k (25y-case premium delta) to +$4.3k (40y-case premium delta). This translates to a 1-2% reduction in NOI and, consequently, lower returns.
So is CMHC’s premium reset a prudent nudge?
From a policy lens, CMHC’s July 2025 overhaul does what public insurers should do: price risk where it resides. By anchoring multi-unit (MU) premiums to LTV, purpose, and asset type—and then applying MLI Select discounts after any surcharges—the framework aligns with OSFI’s MICAT capital rules and reduces the chance that taxpayers subsidize the riskiest files. In plain terms: more capital where loss-given-default is higher; cheaper insurance where risk is genuinely lower.
Is this prudent? Yes—mostly. The change pushes developers toward sounder leverage and verifiable public benefits. Because the 10/20/30% Select discounts apply after surcharges, points have real economic bite that tilts pro formas toward affordability covenants, measurable energy performance, and accessibility—policy priorities that should endure beyond one rate cycle. It also rewards sponsors who can live at ≤75–80% LTV or who can sequence lease-up to avoid “EGI not met” surcharges on term loans.
However, our full-grid analysis (504 scenarios) shows the average effective premium rises in ~82% of the cases and falls in only a select few in the standard rental low LTV cases. Thus, costs increase by 1-2% across the board.
Where prudence shades into policy risk is specialized housing. “Other Shelter Models” now start from a materially higher base, and even a 20–30% Select discount often leaves premiums well above standard rental. In a market already short of beds for students and seniors, that may deter marginal projects or force them into lower leverage just as construction finance has become harder to assemble. If these are priority asset classes, governments should consider targeted, time-bound support (e.g., deeper Select point awards for verified need, or complementary provincial tools) rather than dulling CMHC’s risk signals across the board.
Economically, the timing is sensible. With policy rates off their peak and headed lower, payment relief from cheaper coupons can offset the increase in premiums. A premium system that disciplines leverage and prices long-amortizations should dampen froth, direct scarce debt to resilient deals, and reduce the number of post-tender “rescues.”
For developers, the playbook is clear: (1) Engineer 70–100 Select points you can certify at commissioning; (2) Right-size LTV to maximize premium benefit; (3) Plan the handoff so term loans fund with EGI met; and (4) Where you can’t lower risk, budget the delta early.
The Real Estate Institute of Canada (REIC) equips professionals to lead with evidence and ethics in a shifting housing market. As CMHC recalibrates multi-unit premiums, REIC convenes data, policy, and practice—translating rules into clear pro-forma impacts. Through education, credentialing, and applied research, REIC helps members engage policymakers, lenders, and communities with facts.
What this means in dollars and monthly payments
Premiums are usually capitalized into the mortgage, so the change affects:
- Up-front financed amount (bigger premium → bigger balance), and
- Monthly payment (slightly higher because the balance is higher).
A clear, realistic example many readers recognize:
Standard Rental — TERM, 85% LTV, 100 points (Select)
- Old regime: 2.55% premium.
- New regime (25-year amortization): 3.745% → +1.195 pp.
- New regime (40-year amortization): (5.35% + 0.75%) × 70% = 4.27% → +1.72 pp.
On a $50M loan (premium capitalized), that’s +$597,500 (25 yr case) to +$860,000 (40 yr case) extra premium financed. At a 5.25% coupon, the monthly payment rises by about +$3.0k (25y-case premium delta) to +$4.3k (40y-case premium delta). This translates to a 1-2% reduction in NOI and, consequently, lower returns.
So is CMHC’s premium reset a prudent nudge?
From a policy lens, CMHC’s July 2025 overhaul does what public insurers should do: price risk where it resides. By anchoring multi-unit (MU) premiums to LTV, purpose, and asset type—and then applying MLI Select discounts after any surcharges—the framework aligns with OSFI’s MICAT capital rules and reduces the chance that taxpayers subsidize the riskiest files. In plain terms: more capital where loss-given-default is higher; cheaper insurance where risk is genuinely lower.
Is this prudent? Yes—mostly. The change pushes developers toward sounder leverage and verifiable public benefits. Because the 10/20/30% Select discounts apply after surcharges, points have real economic bite that tilts pro formas toward affordability covenants, measurable energy performance, and accessibility—policy priorities that should endure beyond one rate cycle. It also rewards sponsors who can live at ≤75–80% LTV or who can sequence lease-up to avoid “EGI not met” surcharges on term loans.
However, our full-grid analysis (504 scenarios) shows the average effective premium rises in ~82% of the cases and falls in only a select few in the standard rental low LTV cases. Thus, costs increase by 1-2% across the board.
Where prudence shades into policy risk is specialized housing. “Other Shelter Models” now start from a materially higher base, and even a 20–30% Select discount often leaves premiums well above standard rental. In a market already short of beds for students and seniors, that may deter marginal projects or force them into lower leverage just as construction finance has become harder to assemble. If these are priority asset classes, governments should consider targeted, time-bound support (e.g., deeper Select point awards for verified need, or complementary provincial tools) rather than dulling CMHC’s risk signals across the board.
Economically, the timing is sensible. With policy rates off their peak and headed lower, payment relief from cheaper coupons can offset the increase in premiums. A premium system that disciplines leverage and prices long-amortizations should dampen froth, direct scarce debt to resilient deals, and reduce the number of post-tender “rescues.”
For developers, the playbook is clear: (1) Engineer 70–100 Select points you can certify at commissioning; (2) Right-size LTV to maximize premium benefit; (3) Plan the handoff so term loans fund with EGI met; and (4) Where you can’t lower risk, budget the delta early.
The Real Estate Institute of Canada (REIC) equips professionals to lead with evidence and ethics in a shifting housing market. As CMHC recalibrates multi-unit premiums, REIC convenes data, policy, and practice—translating rules into clear pro-forma impacts. Through education, credentialing, and applied research, REIC helps members engage policymakers, lenders, and communities with facts.
Allwyn Dsouza is REIC’s Senior Analyst, Market Research and Insights. He can be reached at [email protected]. Media enquiries can be directed to [email protected].