Multi-Unit Residential Financing (5+ Units)
Strategic financing solutions for income-producing residential properties with five or more units — designed for scale, stability, and capital efficiency across Canada.
Understanding 5+ Unit Residential Financing
Multi-unit residential financing represents a distinct category within Canadian commercial real estate lending. Once a property contains five or more self-contained dwelling units, it crosses from residential into commercial territory — triggering different underwriting standards, lender requirements, and financing structures.
Unlike traditional residential mortgages that focus primarily on personal income and creditworthiness, multi-unit financing centers on the property's income-generating capacity. Lenders analyze Net Operating Income (NOI), Debt Service Coverage Ratio (DSCR), tenant quality, and market fundamentals to determine borrowing capacity and terms.
This income-focused approach creates opportunities for investors. Strong properties with stable cash flow can support significant leverage regardless of personal income constraints. Whether acquiring your first 6-unit building or expanding a portfolio of purpose-built rentals, understanding multi-unit financing mechanics is essential to optimizing capital structure and long-term returns.
Canada's multi-unit residential sector benefits from CMHC mortgage insurance programs specifically designed for rental housing. These programs — including standard multi-unit insurance and the enhanced MLI Select program — can dramatically improve financing terms for qualifying properties, enabling longer amortizations, higher leverage, and lower rates than conventional alternatives.
Types of Multi-Unit Properties We Finance
From purpose-built rental apartments to student housing and affordable developments, we structure financing for the full spectrum of multi-unit residential assets.
Purpose-Built Rental Apartments
New or existing apartment buildings constructed specifically for rental housing. These institutional-grade assets benefit from strong CMHC support and favorable conventional terms.
Low-Rise & Mid-Rise Multi-Family
Walk-up and elevator buildings from 5-50+ units. Ideal for investors seeking stable cash flow with manageable operational complexity and strong tenant demand.
Mixed-Use with Residential Majority
Buildings combining ground-floor commercial with upper residential units. Eligible when residential represents 70%+ of gross leasable area or income.
Student Housing
Purpose-built or converted properties near post-secondary institutions. Strong seasonal demand patterns with specialized underwriting considerations.
Affordable Housing Projects
Income-restricted rental developments serving below-market tenants. Often eligible for enhanced CMHC terms including MLI Select incentives for affordability outcomes.
Portfolio Multi-Unit Acquisitions
Multiple properties financed under blanket mortgages or cross-collateralized structures. Portfolio strategies offer operational efficiencies and potential pricing advantages.
How Multi-Unit Financing Works
From initial analysis through closing, we manage every phase of the multi-unit financing process with institutional precision.
Property & Income Review
Comprehensive analysis of the subject property including unit mix, rental income, operating expenses, capital reserves, and market positioning. We evaluate current performance and stabilized potential.
Underwriting Analysis
Detailed calculation of Net Operating Income (NOI), Debt Service Coverage Ratio (DSCR), and supportable loan amount. We stress-test assumptions against lender requirements.
Lender & Insurance Structuring
Strategic selection between CMHC-insured and conventional financing based on property characteristics, investment objectives, and optimal terms. We match lenders to your specific situation.
Appraisal & Due Diligence
Coordination of income approach appraisal, environmental assessments, building condition reports, and tenant roll verification. We manage the entire due diligence process.
Closing & Long-Term Positioning
Final documentation, funding coordination, and closing support. We ensure your financing structure supports both immediate needs and long-term portfolio strategy.
Key Underwriting Metrics
Understanding how lenders evaluate multi-unit properties is essential for structuring optimal financing. These metrics drive every underwriting decision.
Net Operating Income (NOI)
The property's gross rental income minus all operating expenses (excluding debt service). NOI is the foundation of commercial real estate valuation and the primary determinant of borrowing capacity. Lenders scrutinize revenue stability, expense ratios, and management efficiency.
Gross Rental Income - Operating Expenses = NOIDebt Service Coverage Ratio (DSCR)
Measures the property's ability to cover mortgage payments from operating income. Most institutional lenders require minimum 1.10x-1.20x DSCR. Higher ratios indicate stronger cash flow cushion and typically result in better pricing.
NOI ÷ Annual Debt Service = DSCRLoan-to-Value (LTV)
The mortgage amount as a percentage of appraised property value. CMHC-insured loans may reach 85% LTV while conventional financing typically caps at 65-75% LTV. Lower LTV generally means better rates and terms.
Loan Amount ÷ Property Value = LTVVacancy & Expense Assumptions
Lenders apply standardized vacancy factors (typically 3-5% for stabilized assets) and verify operating expenses against industry benchmarks. Unrealistic projections trigger scrutiny and potential loan adjustments.
Stabilized Income × (1 - Vacancy Factor)Market Rents & Cap Rates
Appraisers compare in-place rents to market rates and apply capitalization rates to determine value. Below-market rents may indicate upside potential; above-market rents signal risk. Cap rate selection significantly impacts valuation.
NOI ÷ Cap Rate = Property ValueSponsor Strength
While property income drives underwriting, lender assessment includes borrower experience, net worth, liquidity, and credit history. Strong sponsors may access better terms and higher proceeds on transitional or value-add situations.
Experience + Net Worth + Liquidity + CreditCMHC Multi-Unit Mortgage Insurance
Canada Mortgage and Housing Corporation (CMHC) offers mortgage insurance programs specifically designed for multi-unit residential properties with five or more units. This insurance reduces lender risk, enabling significantly better terms for qualifying borrowers and properties.
The standard multi-unit insurance program provides access to institutional lenders with competitive rates and terms. For properties achieving social outcomes in affordability, accessibility, or energy efficiency, the MLI Select program offers additional incentives including rate discounts up to 95 basis points and amortizations extending to 50 years.
Learn About MLI SelectMulti-Unit Financing Options
We structure financing from multiple capital sources, matching the optimal solution to your specific property, timeline, and investment objectives.
CMHC-Insured Financing
Government-backed mortgage insurance enabling optimal terms for qualifying multi-unit residential properties.
- Up to 85% LTV for qualifying properties
- Amortizations up to 40 years (50 with MLI Select)
- Competitive institutional rates
- Available for 5+ unit residential
- MLI Select incentives for social outcomes
Stabilized assets seeking long-term optimal terms
Conventional Institutional
Traditional bank and credit union financing without mortgage insurance, offering flexibility for qualified borrowers.
- 65-75% LTV typical
- 25-30 year amortizations
- Flexible property types
- Streamlined process for strong files
- Portfolio lending options
Strong sponsors with significant equity
Alternative & Private Lending
Non-bank solutions for transitional situations, value-add opportunities, or borrowers requiring flexibility.
- Up to 80% LTV available
- Interest-only options
- Faster approval timelines
- Flexible underwriting
- Bridge-to-permanent strategies
Transitional assets or time-sensitive situations
Acquisition, Refinance & Value-Add
Whether acquiring, refinancing, or repositioning multi-unit assets, we structure financing aligned with your investment thesis and portfolio objectives.
Multi-Unit Purchase Financing
Acquisition financing for apartment buildings, purpose-built rentals, and multi-family portfolios. We structure purchases to optimize leverage, cash flow, and long-term equity growth.
Learn moreRefinance & Equity Take-Out
Access accumulated equity through refinancing for portfolio expansion, capital improvements, or debt restructuring. We position refinances to maximize proceeds while maintaining healthy DSCR.
Learn moreStabilization & Repositioning
Bridge and transitional financing for lease-up, renovation, or repositioning strategies. We structure interim financing with clear paths to permanent take-out.
Learn morePortfolio Optimization
Strategic review of existing multi-unit holdings to identify refinance opportunities, consolidation benefits, and optimal capital structure across your portfolio.
Learn moreWhy Use a Commercial Mortgage Agent
Multi-unit financing involves complex underwriting, multiple lender relationships, and strategic structuring decisions that significantly impact long-term returns. Working with an experienced commercial mortgage agent provides advantages that direct lender relationships cannot match.
| Factor | Direct Lender | Broker-Led |
|---|---|---|
| Lender Options | Single | Multiple |
| Structuring Expertise | Limited | Comprehensive |
| CMHC Navigation | Basic | Specialized |
| Competitive Tension | None | Active |
| Portfolio Strategy | No | Yes |
Multi-Unit Financing Scenarios
Anonymized examples illustrating how we structure multi-unit financing for different situations and objectives.
Purpose-Built Rental Acquisition
48-unit mid-rise apartment building
Greater Toronto Area
First-time multi-unit investor acquiring stabilized asset from long-term owner. Required maximum leverage with institutional terms.
Structured CMHC-insured acquisition with 85% LTV, 40-year amortization, and competitive five-year fixed rate. DSCR of 1.25x provided comfortable cash flow cushion.
Strong positive cash flow from day one with clear path to equity accumulation through amortization and market appreciation.
Value-Add Refinance Post-Stabilization
24-unit low-rise apartment complex
Ottawa Region
Owner completed $800K renovation increasing rents 35%. Existing bridge loan maturing with need to access equity for next acquisition.
Refinanced into conventional institutional financing at new appraised value, extracting $1.2M equity while maintaining healthy 1.18x DSCR.
Recycled capital into next multi-unit acquisition while maintaining positive cash flow on stabilized asset.
CMHC MLI Select Affordable Housing
72-unit purpose-built rental development
British Columbia
Developer seeking maximum leverage and extended amortization for new affordable housing project with 30% below-market units.
Structured CMHC MLI Select financing with 95 basis point discount, 50-year amortization, and 85% LTV. Affordability commitments qualified for maximum incentives.
Dramatically improved project economics enabling viable development of much-needed affordable rental housing.
Multi-Unit Financing FAQ
Structure Your Multi-Unit Portfolio with Confidence
Whether you are acquiring your first 5+ unit building or optimizing a multi-property portfolio, we provide the structuring expertise and lender relationships to maximize your financing outcomes.
Information is for general purposes only and does not constitute financial advice. Financing is subject to lender approval. CMHC references are educational and do not guarantee program availability or terms.