Is MLI Select a “Golden Ticket” or a Debt Trap?

In the current 2026 real estate market, CMHC MLI Select is the name on every investor’s lips. The promise of 95% Loan-to-Cost (LTC) and a 50-year amortization sounds like a loophole in the laws of economics. It suggests you can acquire a massive multifamily building with only 5% down and enjoy tiny monthly payments.

But as the saying goes: If it sounds too good to be true, it probably is. As a coach who has seen investors transition from the “Canadian struggle” to the “US opportunity,” I’ve watched many get stuck in the MLI Select pipeline. While the leverage is real, the hidden costs are often high enough to wipe out your returns before you even break ground.

1. The Energy Efficiency Money Pit

To secure the best terms (the full 100 points), your building must far exceed the 2020 National Building Code in efficiency. In 2026, this goes beyond just “better windows” and often requires:

• Passive House Standards: Advanced HVAC and heat recovery systems, which can cost 20–30% more than standard construction.
• Specialized Contractors: Standard crews won’t suffice—you’ll need CMHC-approved trades, who typically charge a premium.
• Documentation Overload: Expect additional costs for energy auditors and engineering reports at every stage of the process.

Often, the “5% down” you saved ends up going straight toward these mandatory, non-cosmetic upgrades—costs that don’t necessarily boost your rental income.

2. The 15-Month “Approval Limbo”
   In 2026, high demand for this program has created significant backlogs. Some investors I know have waited up to 15 months for a final certificate.

• The Carrying Cost: While waiting for CMHC approval, you may be stuck paying high-interest bridge financing.
• The Appraisal Cliff: If the market shifts during the wait, CMHC could re-appraise your property at a lower value, forcing you to inject additional cash at the last minute to maintain your 95% LTV.

3. The Arrears and Oversupply Warning
   A growing concern in 2026 is the rising multifamily arrears rate, especially in markets like Calgary and parts of Quebec. Many developers jumped into MLI Select projects underwritten at a 2% vacancy rate, only to face actual vacancies around 7% as multiple “affordable” units hit the market simultaneously.

With 95% leverage, there’s virtually no margin for error a single month of unexpected vacancy can quickly put you in the red.

4. The 10-Year “Affordability” Lock-In
   To earn the points, you must agree to keep a portion of your units below the median market rent for 10 to 20 years.

• The Income Cap: Even if property taxes or insurance rise, rent increases on these units are capped by the government.
• The Resale Discount: When you sell, the next buyer must honor this commitment, making your property less appealing than a “free-market” building and potentially lowering your exit price.

5. The Exit Strategy Trap
   The biggest risk in 2026 is refinance uncertainty. If you’re at 95% LTV today, what happens in five years when your mortgage comes up for renewal?

• Rule Changes: CMHC frequently updates its requirements, and you may not be able to renew at 95% LTV.
• Forced Paydown: If the property hasn’t appreciated significantly, you could be required to pay down hundreds of thousands of dollars just to qualify for a conventional renewal.

Why Simplicity Wins in 2026

The complexity of CMHC MLI Select is exactly why I advocate for a simpler approach. While MLI Select forces you to act as a developer, an energy consultant and a government partner, U.S. real estate investing lets you focus on being an investor.

In the US, DSCR Loans offer:

• Fast closings in about 30 days, not 15 months.
• No 50-year affordability commitments or rent caps.
• Immediate cash-flow focus, without the stress of overleveraging.

The Bottom Line: CMHC MLI Select is a powerful tool—but it’s heavy. If you’re frustrated by Canadian red tape and want a more passive path to building wealth, the U.S. market may be the release valve you’ve been looking for.

Curious how your Canadian deal stacks up against a US cash-flow opportunity? Book a call with our team today and let’s run the real numbers.

FAQ

1. Is the 95% financing based on the purchase price?

No, it is based on LTC (Loan to Cost) for new builds or LTV (Loan to Value) for existing properties. CMHC’s “value” might be lower than what you actually paid.

2. Do I need US credit to switch to US investing?

No. Most US lenders for Canadians use your Canadian credit score and the property’s cash flow (DSCR) to qualify you.

3. What is the “Visitability” requirement?

Under 2026 rules, almost all MLI Select projects must be 100% “visitable,” meaning no-step entries and wider doorways, which can add significant cost to renovations.

4. Can I buy a 4-plex with MLI Select?

No, it must be 5 units or more. For 1-4 units, you must use standard residential financing.

5. What is “Limited Recourse” in this program?

If you achieve 100 points, CMHC may offer limited-recourse financing, meaning they can’t come after your personal assets beyond the property in a default—but this is only for the most elite, high-scoring projects.

6. Is there a net worth requirement?

Yes. Usually, you need a net worth of at least 25% of the loan amount, with a portion of that being liquid.

7. Why are people moving to the US market instead?

Less regulation, faster closings, higher cash flow and the ability to own property without government-mandated rent caps or “green” renovation requirements.

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