Apartment Construction Loan Program: Standard Rental Housing
No fixed amount
Loan
Description:
The Apartment Construction Loan Program provides low-cost financing to support the construction of standard rental housing. It also supports the conversion of non-residential to standard rental housing.
Comments on Funding:
Loans through the program offer:
Favourable terms
– A fixed interest rate locked in at first advance for certainty during the riskiest periods of development.
– Qualify for up to a 50-year amortization period.
– Qualify for 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).
Low costs
-Interest-only payments: Financed by the loan during construction and paid by the borrower from the occupancy permit until 12 consecutive months of stabilized effective gross income (stabilization).
-Principal and Interest payments: Paid by the borrower from stabilization to end of term.
Access to CMHC mortgage loan insurance
-CMHC mortgage loan insurance is an integrated feature of the program. The borrower does not pay the premium, only the PST if applicable.
Continuous Intake
Eligibility:
Applicants must be for-profit developers, non-profit developers and other levels of government.
All projects must:
a. have at least 5 rental units
b. have a loan size of at least $1 million
c. respond to a need for rental supply
d. primary purpose of the project must be considered residential with the non-residential component not to exceed 30% of total gross floor space nor 30% of total cost
e. be permanent in nature (long-term stay)
f. meet the minimum documentation requirements
Financial viability:
a. You must have the financial and operational ability to carry the project without ongoing subsidies and the ability to meet debt coverage ratio requirements.
Affordability:
You must meet and maintain one of the following affordability requirements for at least 10 years:
Option 1:
a. At least 20% of units must have rents below 30% of the median total income of all families in the subject market.
Option 2:
a. Alternatively, the requirement may be met if rents are established pursuant to an affordable housing program or other initiative (federal, provincial, territorial or municipal) that approves the proposal and provides support for the development of the standard rental housing project.
Application Steps:
Applicants must:
1. provide all documents outlined in the Required Documentation Checklist (PDF) in the application stage.
2. Complete these forms before signing in or creating an account in the CMHC portal:
• Project Assessment Workbook (Excel)
• Integrity Declaration (PDF)
3. After receiving confirmation from your CMHC specialist that your draft application is complete, you can submit your application to the portal and upload all required documents.
Documentation Needed:
Applicants must submit:
1. Integrity Declaration
All proponents must provide a newly signed CMHC Integrity Declaration2, even if one has been provided previously for another CMHC application
2. Corporate Documents
Proponents and guarantors must provide all the documents
listed below, as applicable:
a. Articles of incorporation, Bylaws including all supporting documentation, such as, but not limited to – a business name registration, articles of organization, constitution documents, etc
b. Detailed information about the entity’s ownership structure, including any related entities.
c. Organization chart.
d. The name and relationship of all registered and beneficial owners of the property (not applicable if the property is in Quebec).
Considerations for On-Reserve Applicants:
e. Chief and council members should be included in the organization chart.
3. Financial Statements
a. Audited financial statements for the most recent three years for the proponent(s) and each guarantor(s) and parent company (if applicable). Review Engagement or alternative options may be accepted at CMHC’s
sole discretion.
b. For new entities, alternative options may be considered at CMHC’s sole discretion.
c. Personal net worth statements for individual guarantors,
if applicable.
4. Development Experience
a. The proponent, their contracted builder or developer must provide resume(s) demonstrating their experience in construction, including: a list of completed and current projects of similar size and scope as the subject building, property address, type of property, number of levels,
number of units, overall project budget, year completed.
b. List of all new construction and renovation projects currently underway, regardless of whether financed and/or insured by CMHC.
5. Property Management Experience
a. The applicant must provide resume(s) outlining the experience of the entity and individuals managing the property, including property address, type of property, tenant profile, number of levels, number of units and number of years of management experience.
b. If the management of the property will be contracted out, the proponent must provide resume(s) of the contracted property manager company outlining their related experience in managing properties of similar size with all the details outlined above
Other Things to Note:
About the author
Maurice