First National Financial LP

CMHC to eliminate flex, introduce major new affordable housing incentive

  • First National Financial LP

In what is arguably the most meaningful change in CMHC’s affordable housing strategy in a generation, the national housing agency has announced it is introducing a game-changing new mortgage insurance program called MLI Select. With it, Flex and Flex B will be no more.

Full details have yet to be released, but our initial analysis suggests that MLI Select will be a worthy successor to Flex. It goes well above and beyond anything the government has offered before to incent both the creation and preservation of affordable rental units.

The changeover to this new program will happen in the spring of 2022 – the specific date has yet to be announced – but we can confirm the following:

  • MLI Select will offer up to 50-year amortizations – compared to up to 40 years for its Flex incentives – depending on your level of commitment to one or more of the following: affordability, accessibility, and climate compatibility
  • Applications will be scored with points awarded in each area and these points are valuable -- for example, a minimum score of 100 points could mean a 1%-1.25% insurance premium and LTV or LTC up to 95%
  • You are free to choose which of these three areas to focus on – and how ambitious you want to be in each – or if you want more financial incentives, you can pursue points in one, two or all three
  • Each category will be scored on specific criteria

MLI Select uses median renter income in the market where the property is located as its sole measure of affordability to qualify for insurance. To be specific, 30% of median renter income is the qualification threshold. CMHC provides a helpful table with details linked to my message here. As an example of the practical implications, our team calculates that 30% of Vancouver’s median renter income would allow maximum monthly rent under this program of $1,672.50, using 2019 StatsCan data. This contrasts with Flex’s definition of affordability, which for new apartment builds demands total residential rental income to be at least 10% lower than market rates.

Interested in knowing more? First National is ready to share more.

In a CMHC briefing given last week to First National as an approved lender, we were told the operative word about MLI Select is more. The more committed you are to social and environmental outcomes, the more and better the incentives, be they reduced insurance premiums or longer amortizations or both.

While there are a variety of combinations and permutations available with MLI Select, taken together this program goes beyond Flex, making it far more attractive to insure new construction and refinances/purchases. We’re also pleased to note that extra-long amortization options are incentives First National has actively promoted over the past few years.

If construction, refinance or purchase is in your pipeline for 2022, you owe it to yourself to investigate MLI Select. There is no better way to do so than by speaking to your First National advisor who has the in-depth knowledge to run the numbers, provide an unbiased assessment of it versus financing alternatives and the experience to successfully secure the best option for you.