By James Fields, Toronto Real Estate Broker & Multifamily Development Specialist

What Is MLI Select and How Does It Work?

In the last few years, one financing tool has quietly reshaped how many of us in the multifamily development and investment world evaluate projects: CMHC’s Mortgage Loan Insurance Select, more commonly known as MLI Select. As someone who works in Toronto’s development and acquisition landscape every day, I’ve seen the program unlock opportunities that wouldn’t otherwise pencil out, particularly for investors and developers navigating high interest rates, escalating land prices, and the city’s ongoing demand for rental housing.

At its core, MLI Select is a mortgage loan insurance program designed specifically for multi-unit residential properties. What makes it different from traditional CMHC products is the way it ties financial incentives to measurable social outcomes. Instead of offering a one-size-fits-all insurance structure, CMHC built MLI Select on a points-based system that rewards projects that meaningfully contribute to affordability, energy efficiency, and accessibility. The more a project aligns with these goals, the better the financing terms become. For developers, this can mean reduced premiums, significantly higher loan-to-value ratios, and amortization periods stretching as long as fifty years, features that dramatically improve project viability.

The program didn’t come out of nowhere. Canada has been experimenting with affordable housing initiatives since the 1970s, but today’s market pressures have forced a shift in how we think about both supply creation and long-term sustainability. MLI Select represents a modernization of earlier policies that were often narrow in scope. Instead of focusing solely on energy efficiency or subsidized housing models, it encourages a broader range of developers, private, non-profit, and institutional, to incorporate social and environmental commitments into the fabric of their projects. This has made the program particularly attractive in cities like Toronto, Vancouver, and Montreal, where demand for rentals continues to outpace supply and financing challenges have become a major bottleneck for new construction.

To qualify for MLI Select, a property generally needs to have at least five residential units, or fifty units in the case of retirement homes. The program applies to a wide spectrum of housing types, including standard rentals, student housing, supportive housing, and single-room occupancy buildings. Both new construction and the acquisition or renovation of existing buildings can qualify, provided the project meets the required standards and achieves enough points in the scoring system. This flexibility is one of the reasons the program has been adopted so quickly, developers can integrate it into everything from new mid-rise builds to repositioning aging 1960s apartment stock.

The points system is where the real innovation lies. Projects earn points across three categories: affordability, energy performance, and accessibility. Affordability points might be earned by committing a percentage of units to below-market rents for a defined period of time. Energy efficiency points are tied to measurable improvements over current building code requirements, while accessibility points reward design features that support barrier-free living. A minimum of fifty points is required to access the program’s enhanced benefits, but higher scores unlock the most favourable terms. This approach creates a clearer incentive structure and helps developers integrate social goals into the earliest stages of design and planning.

The financial requirements for borrowers are straightforward but important. CMHC expects applicants to have a personal net worth equal to at least twenty-five percent of the loan amount and access to a minimum of one hundred thousand dollars in liquid assets, in addition to the required down payment, sometimes as low as five percent. A minimum debt service coverage ratio of 1.10 is also mandated, which is considerably more flexible than most conventional lenders would allow for multifamily assets. These conditions, paired with the extended amortizations, make the program especially appealing for long-term investors who prioritize stable cash flow and asset appreciation.

Despite its many advantages, MLI Select is not without challenges. Anyone who has gone through the process knows the application is more complex than a standard underwriting package. CMHC requires detailed documentation: appraisals, environmental assessments, construction budgets, energy modelling, market studies, and financial projections. The review period typically takes between four and six weeks, though it can stretch longer if information is incomplete or inconsistent. For smaller developers without in-house analysts or consultants, the administrative burden can feel overwhelming. Even those of us who work with the program frequently still find that proactive communication and meticulous preparation are essential to keeping applications on track.

There are also legitimate concerns about how effectively the points system captures true affordability and sustainability. Some critics argue that developers can structure projects to maximize points without meaningfully improving real-world outcomes. Others worry that the benefits tend to flow more toward investors than tenants, since lower premiums and longer amortizations do not automatically translate into lower rents. The program’s impact is also highly sensitive to market conditions. When interest rates rise or construction costs spike, even the improved financing terms may not be enough to make marginal projects financially viable.

Still, the program’s influence is undeniable. In markets like Toronto, where land values, zoning constraints, and construction costs force developers to rethink traditional pro formas, MLI Select can be the difference between a project happening or being shelved indefinitely. It encourages long-term thinking, pushes for higher-quality buildings, and supports a more socially responsible development landscape without relying on direct subsidies or public spending.

Looking ahead, MLI Select will likely play an even bigger role as Canadian cities continue to densify and governments search for ways to stimulate rental supply. Investors and developers are already responding to the incentives by incorporating higher energy performance standards and permanent affordability commitments into their projects—features that used to be seen as cost burdens but are now becoming strategic advantages.

From my perspective, MLI Select is not a perfect system, but it is one of the most effective policy tools currently available for addressing Canada’s housing challenges. It aligns financial interests with community outcomes, encourages thoughtful design, and supports projects that would otherwise struggle to secure favourable financing. And in a market like Toronto, where every inch of land, every basis point, and every dollar of carrying cost matters, that alignment is essential.

If Canada is going to build the rental housing it needs over the coming decade, MLI Select will almost certainly be part of the solution. For investors, developers, and policymakers alike, understanding how the program works is no longer optional; it’s fundamental to navigating the future of the multifamily housing market.