CMHC MLI Select Premium Changes 2025

What Changed on July 14, 2025

On July 14, 2025, CMHC implemented a comprehensive restructuring of the mortgage loan insurance premium framework for multi-unit properties. The changes standardized the premium grid across property types, introduced a more granular LTV-based rate structure, and revised the surcharge calculations for amortization periods, non-residential components, second mortgages, and economic income shortfalls.

The restructuring affects all new CMHC insurance applications submitted after July 14, 2025. Applications submitted before that date under the previous premium structure are grandfathered. Borrowers with existing CMHC-insured loans are not affected — the premium is a one-time cost calculated at origination.

The net impact varies by project. Some property types and LTV ranges saw modest premium increases, while others saw decreases. The most significant change for MLI Select borrowers is that the premium discount tiers (10%, 20%, 30%) became even more valuable, because they are applied against a higher base in many scenarios.

Why CMHC Made These Changes

The premium restructuring was driven primarily by OSFI's Mortgage Insurer Capital Adequacy Test (MICAT) 2025 framework, which updated the capital requirements for mortgage insurers including CMHC. The new MICAT rules required CMHC to hold more capital against certain types of insured loans, particularly those with higher LTV ratios and longer amortization periods.

Rather than absorbing the increased capital costs uniformly, CMHC adopted a risk-based pricing approach. Premiums now more closely reflect the actual default risk profile of each loan, based on the LTV ratio, loan purpose (construction carries higher risk than purchase or refinance), and shelter type (standard rental has different risk characteristics than student housing or retirement residences).

The restructuring also simplified the premium framework by consolidating previously separate rate tables into a unified grid. This makes premium calculations more transparent and predictable for borrowers and brokers, even if some individual premium rates changed in the process.

The New Premium Grid Explained

The July 2025 premium grid is organized along two primary dimensions: shelter type (Standard Rental vs Other Shelter) and loan purpose (Construction/Substantial Improvement vs Purchase/Refinance). Within each combination, rates increase with LTV in bands.

Standard Rental is the most common category, covering purpose-built rental housing with conventional unit mixes. Other Shelter includes student housing, retirement residences, single-room occupancy buildings, and other specialized housing types.

Construction/Substantial Improvement premiums are generally higher than Purchase/Refinance premiums at the same LTV, reflecting the additional risk inherent in construction projects (cost overruns, completion delays, lease-up risk). The differential is most significant at higher LTV ratios.

LTV bands typically span 5% increments (65-70%, 70-75%, 75-80%, etc.), with the premium rate increasing at each step. The jump from 85% to 90% LTV and from 90% to 95% LTV are particularly significant — borrowers considering whether to target the maximum 95% LTV should carefully evaluate whether the additional leverage justifies the premium increase at those highest bands.

Surcharges Decoded

Surcharges are additive fees applied on top of the base premium rate. They reflect risk factors that are independent of LTV but affect the overall risk profile of the loan. Understanding how they stack is essential for accurate premium estimation.

Amortization surcharge: +0.25% per 5-year period beyond 25 years. A 30-year amortization adds 0.25%, 35 years adds 0.50%, 40 years adds 0.75%, 45 years adds 1.00%, and the maximum 50 years adds 1.25%. This is the largest single surcharge for most MLI Select borrowers who are targeting long amortization periods.

Non-residential surcharge: +1.00%. Applied when the property includes more than 30% non-residential gross floor area (retail, office, commercial). This is a significant surcharge — it can add tens of thousands of dollars to the premium on a large loan. Properties with ground-floor retail should evaluate whether the non-residential space pushes them over the 30% threshold.

Second mortgage surcharge: +0.50%. Applied when a second mortgage exists behind the CMHC-insured first mortgage. This includes mezzanine financing and any other subordinate debt.

EGI shortfall surcharge: +0.25%. Applied when the effective gross income (EGI) does not meet CMHC benchmark levels for the market and property type. This is essentially a risk premium for properties where CMHC believes rental income projections may be aggressive.

Worked Example: How Surcharges Stack

Consider a new construction standard rental property at 90% LTV with 50-year amortization and a small amount of ground-floor retail (under 30%). Base premium (construction, 90% LTV): approximately 4.50%. Amortization surcharge (50yr = 5 extra periods): +1.25%. No non-residential surcharge (under 30%), no second mortgage, EGI meets benchmark. Total before discount: 5.75%.

The MLI Select Discount

The MLI Select premium discount is applied to the total premium (base rate plus all surcharges). The discount tiers remain unchanged from before July 2025:

• 50 points: 10% discount
• 70 points: 20% discount
• 100 points: 30% discount

Post-July 2025, the discount is even more impactful in absolute dollar terms because the base premiums and surcharges are higher for many scenarios. A 30% discount on a 5.75% total premium saves 1.725 percentage points — on a $10M loan, that is $172,500 in premium savings. This makes scoring well more financially important than ever.

The premium can be capitalized into the mortgage (added to the loan amount) so it does not require upfront cash. However, capitalizing the premium means paying interest on it over the life of the loan, increasing the total cost. For most borrowers, the convenience of capitalization outweighs the incremental interest cost, but it is worth quantifying both options.

Before vs After: The Reference Case

CMHC's published reference case illustrates the impact. For a $15.6M, 48-unit new construction standard rental project at 90% LTV with 50-year amortization and 100 MLI Select points:

The total premium after surcharges and after the 30% MLI Select discount is approximately 4.0% of the $14M loan, or roughly $560,000. This premium is capitalized into the mortgage, adding approximately $875 to the monthly payment over 50 years — a small fraction of the thousands in monthly payment savings that MLI Select delivers through its lower rate and longer amortization.

The key takeaway is that even under the new premium structure, MLI Select financing remains dramatically cheaper on a monthly basis than conventional alternatives. The premium is a one-time cost embedded into the loan; the rate and amortization advantages compound every month for the life of the mortgage.

Strategy: How to Offset Higher Premiums

Score higher. The MLI Select discount is the single most powerful lever for reducing premium costs. Moving from 50 points (10% discount) to 100 points (30% discount) can save hundreds of thousands on a large loan. Invest in scoring optimization before accepting a lower tier.

Reduce LTV if feasible. If you have additional equity available, dropping from 95% to 90% or from 90% to 85% LTV reduces the base premium rate. The savings must be weighed against the opportunity cost of deploying more equity.

Consider shorter amortization if cash flow allows. Each 5-year reduction saves 0.25% in surcharges. Dropping from 50 to 40 years saves 0.50% — on a $10M loan, that is $50,000 in premium savings. But the shorter amortization increases monthly payments, so model the cash flow impact carefully.

Construction vs purchase timing. Construction premiums are higher than purchase premiums. If you have the option to acquire a building that is substantially complete rather than financing from ground-up construction, the purchase premium rate applies and saves materially.

Avoid unnecessary surcharges. Keep non-residential space below 30% of gross floor area to avoid the 1.00% surcharge. Avoid second mortgages if possible. Ensure your pro forma meets EGI benchmarks to avoid the 0.25% shortfall surcharge.

The Holdback Change

In addition to premium restructuring, CMHC made a notable change to holdback policies. For MLI Market (standard insurance without MLI Select), CMHC removed rental achievement holdbacks — meaning construction financing advances are no longer withheld pending lease-up of a certain percentage of units. This improves cash flow for developers during the construction-to-stabilization transition.

For MLI Select projects, holdbacks remain case-by-case. CMHC may still require holdbacks based on project-specific risk factors, particularly for larger projects, untested markets, or borrowers with limited track records. Discuss holdback expectations with your broker early in the process so they can be factored into your construction financing plan.

Model Your Premium

Use our Premium Estimator to calculate your premium under the July 2025 framework. The tool applies the correct base rate, all applicable surcharges, and the MLI Select discount for your scoring tier. For scoring strategy optimization, start with the Scoring Deep Dive guide.