Multi-family mortgages: 5+ units, underwritten on the building

Five units is the line: 1–4 is residential, 5+ is commercial

A building with one to four units goes through a residential mortgage: your income, your credit, your down payment. From the fifth unit up, the whole building is commercial multi-family: the lender mostly asks whether the rents carry the debt, and you move to second place.

The line also decides who you borrow from. Almost every bank does 1–4 units; 5+ is a different department, a different document list and a different pricing book, and many residential-only brokers simply don’t touch it.

For a buyer this can be good news: with a strong enough building, someone with an ordinary personal income can carry a loan far beyond their “personal limit” — because the building repays it, not your pay stub.

CMHC-insured vs conventional — how big is the gap?

In multi-family, CMHC (Canada Mortgage and Housing Corporation) insures loans. An insured loan is nearly riskless for the bank, so the rate is visibly lower, the leverage higher and the amortization longer. The price: an insurance premium, a slower approval and stricter requirements.

The conventional (uninsured) route commonly lands at 60–75% leverage, around 25-year amortization and a higher DSCR bar — all varying by lender. Its advantages are speed and flexibility.

Which one wins is not a matter of opinion. Holding five-plus years for cash flow, insured usually pays off; buying to renovate and flip, conventional often fits better. Run your building’s numbers once and the answer shows itself.

What is MLI Select, and why does every multi-family conversation mention it?

MLI Select is CMHC’s multi-unit insurance product, launched in 2022, that trades commitments for better terms. You earn points across three dimensions — affordability, energy efficiency, accessibility — in tiers of 50, 70 and 100 points. More points, better terms. It applies to rental properties of five or more units.

At the top tier: up to 95% financing, amortization up to 50 years, and DSCR underwritten as low as 1.10 — all three at once, which nothing conventional can touch. Lower tiers are still strong: at 50 points, new construction can reach 95% (existing buildings 85%) with amortization up to 40 years.

How points are earned, by example: committing part of the units to affordable rents for ten-plus years, or genuinely cutting the building’s energy use. Commitments are real — CMHC follows up. Whether the trade is worth it depends on your rent roll, which is exactly the kind of question to phone me about. Point rules and tier parameters are as published by CMHC at the time.

Where does the loan amount actually come from? DSCR decides

In commercial multi-family the binding constraint is usually not the loan-to-value ratio — it is DSCR (debt service coverage): the building’s net operating income divided by the annual payments has to clear the lender’s bar. NOI = rents minus vacancy minus operating costs (property tax, insurance, maintenance, management…).

Two common surprises. One: even if you manage the building yourself, underwriting deducts a market-rate management fee anyway. Two: rents count at the actual leases, not at “what the market should pay” — old below-market leases drag the loan amount down.

So two buildings at the same asking price can borrow very different amounts. Read the rent roll before the photos.

Buying multi-family in BC: what else to watch

Rent control: BC caps annual increases for existing tenants at a rate the province publishes each year. If you buy a building with below-market rents, “bringing rents up” is slower than you think — and lenders price that reality in.

More paperwork than residential: rent roll, two to three years of operating statements, tax and insurance bills, plus third-party reports — an AACI appraisal, a Phase I environmental assessment, a building condition report. These cost thousands, need scheduling, and belong in the deal timeline from day one.

Time: conventional can close in weeks; the CMHC-insured route adds CMHC’s own review and generally runs in months. Write your subject-removal dates around that reality, or your deposit gets nervous.

Who is multi-family right for?

Investors with a few scattered rentals who want the management under one roof; families living in one unit and renting the rest; and self-employed buyers with strong down payments but lean tax returns — multi-family underwrites the building, not the person, which neatly bypasses the “low reported income” wall.

The flip side: if you want something purely hands-off, think twice. A building is a small business — tenants, repairs and books are real. You can hire management, but the fee goes into NOI and eats loan capacity directly.

If you are weighing two or three candidates, send me the rent rolls. I’ll put “what each one borrows, what it pays monthly, what cash flow is left” on one page for you.

Common questions