Access more financing options for new construction and home improvements.
According to the Mortgage Consumer Survey, 31% of mortgage consumers didn’t know their renovation costs could be added to their mortgage.
CMHC Improvement is for homebuyers purchasing an existing home that requires some work or building a new home from the ground up.
Download our CMHC Improvement Fact Sheet (PDF).
CMHC Green Home offers a premium refund up to 25% to borrowers who buy, build or renovate for energy efficiency using CMHC-insured financing.
CMHC Improvement offers a choice of flexible advancing options, making it easy to access funds for immediate improvements when purchasing a home.
Single advances: improvement costs less than or equal to 10% of the as-improved value.
Progress advances: improvement costs greater than 10% of the as-improved value.
For loans involving improvements, the property is assessed on a dual basis:
(If proposed improvements are generally accepted to add value to a property, the lender can submit to CMHC the as-is value plus the cost of improvements.)
The lending value is the lesser of:
You will need documentation to support the as-improved value. Examples include a list of improvements and cost estimates, plans for major renovations or a building permit, as applicable.
Owner-built home
The borrower holds title to the land by the first advance, performs the work themselves or manages the construction of the home.
Contract-built home
The borrower holds title to the land by the first advance and has a contract with a single builder to construct the home.
Homebuilder pre-sold
The builder retains title to the land during the course of construction. The Approved Lender advances directly to the builder during construction. Before construction begins, the borrower has an agreement of purchase and sale for the land and the home with a single builder constructing the home.
New construction loans are advanced via the applicable “progress advance” processing option.
A New Home Warranty must be in place for all new homes. You will need evidence of the home’s enrollment in a recognized new home warranty program in all provinces and territories where these programs are available. This requirement applies even if not required under provincial or territorial law.
If a new home warranty program is not available in a particular province or territory, or in the case of an owner-built home which is exempt from new home warranty, you will need an occupancy permit or a third party report from a qualified professional. Qualified professionals include, but are not limited to, inspectors, architects and engineers to confirm construction is complete and in compliance with applicable bylaws and regulations.
Individuals who are Canadian citizens, permanent residents of Canada, or non-permanent residents who are legally authorized to work in Canada.
For homeowner loans (owner-occupied properties), the loan-to-value ratio for 1 – 2 units is up to 95% LTV. For 3 – 4 units, the ratio is up to 90% LTV.
For small rental loans (non-owner occupied), the loan-to-value ratio for 2 – 4 units is up to 80% LTV.
For homeowner loans, the minimum equity requirement for 1 – 2 units is 5% of the first $500,000 of lending value and 10% of the remainder of the lending value. For 3 – 4 units, the minimum equity requirement is 10%.
For small rental loans, the minimum equity requirement is 20%.
For both homeowner and small rental loans, the maximum purchase price / lending value or as-improved property value must be below $1,000,000.
For homeowner loans, CMHC-insured financing is available for one property per borrower/co-borrower at any given time.
The maximum amortization period is 25 years.
The property must be located in Canada and must be suitable and available for full-time, year-round occupancy. The property must also have year-round access (via a vehicular bridge or ferry if it is on an island).
A traditional down payment comes from sources such as savings, the sale of a property, or a non-repayable financial gift from a relative.
A non-traditional down payment must be arm’s length and not tied to the purchase and sale of the property, either directly or indirectly, such as unsecured personal loans or unsecured lines of credit. Non-traditional down payments are available for 1 – 2 units, with 90.01% to 95% LTV, with a recommended minimum credit score of 650.
Whether the property is owner occupied or non-owner occupied, subject to an MLI application or not, we offer different approaches to rental income for qualification purposes.
Find out more about the approach(es) that can be used to calculate rental income and the inputs to consider when calculating the debt service ratios.
At least one borrower (or guarantor) must have a minimum credit score of 600. In certain circumstances, a higher recommended minimum credit score may be required. CMHC may consider alternative methods of establishing creditworthiness for borrowers without a credit history.
The standard threshold is a gross debt service (GDS) ratio of 35% and a total debt service (TDS) ratio of 42%. The maximum threshold is a GDS ratio of 39% and a TDS ratio of 44% (recommended minimum credit score of 680). CMHC considers the strength of the overall mortgage loan insurance application, including the recommended minimum credit scores.
The GDS and TDS ratios must be calculated using an interest rate that is either the contract interest rate or the Bank of Canada’s 5-year conventional mortgage interest rate, whichever is greater.
Single advances include improvement costs less than or equal to 10% of the as-improved value.
Progress advances include new construction financing or improvement costs greater than 10% of the as-improved value. With Full Service, CMHC validates up to 4 consecutive advances at no cost. For Basic Service, the Lender validates advances without pre-approval from CMHC.
Non-permanent residents must be legally authorized to work in Canada (with a work permit). Mortgage loan insurance is only available for non-permanent residents for homeowner loans for 1 unit, up to 90% LTV, with a down payment from traditional sources.
Non-permanent residents are not eligible for alternative methods of establishing creditworthiness. In cases where a credit report is not available, a letter of reference from the borrower’s financial institution in their country of origin may be considered.
Learn about mortgage insurance premium costs with our Premium Information for Homeowner and Small Rental Loans.
Contact your Regional Manager, Client Relations or call our Underwriting Centre team at 1-888 GO emili (1-888-463-6454).
This material is a quick reference tool for CMHC’s common Mortgage Loan Insurance. Additional conditions may apply.
This information is subject to change at any time. Please verify with CMHC that you have the most up to date information before the loan is processed.
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