CMHC MLI Select / Standard Max Loan Calculator

Problem

Many investors assume 25-30% expense ratios when actual expenses often run 35-45% for older buildings. This overestimates your debt coverage ratio and leads to approval issues.

Solution

Use conservative expense estimates including: property tax (1-2% of value), insurance (0.5-1%), maintenance (5-8%), utilities (if owner-paid), vacancy (5-10%), management fees (4-8%). Review actual rent rolls and expense statements from comparable properties.

Problem

While the calculator shows year-one DCR, lenders often stress-test with flat rents or even declining rents. You might calculate 1.25 DCR but lenders see 1.15.

Solution

Be conservative with rent growth assumptions. Use 0-2% annual growth, not 3-5%. If you plan renovations, show how they specifically increase rent, with documentation from comparable units.

Problem

Some investors calculate income based on 100% occupancy. Even well-managed buildings experience 5-10% vacancy. This dramatically affects DCR.

Solution

Always apply vacancy loss to gross rental income before calculating expenses. Use 8-10% for market-rate properties, 5-8% for affordable housing, 15-20% for student housing. Better yet, look at actual rent roll vacancy data.

Problem

Lenders increasingly require that you reserve capital for future roof, HVAC, and mechanical system replacement. These aren't shown in year-one expenses but drastically affect cash flow.

Solution

Budget 2-3% of gross revenue annually for capital replacement reserves. For older buildings (20+ years), budget 4-5%. Include this in your operating expense calculation to be realistic with DCR.

Problem

Some investors think 85% LTV means only 85% cash down when it actually means 85% of the property value is borrowed—requiring a 15% down payment.

Solution

Remember the formula: LTV is the loan amount divided by property value. 85% LTV = 15% down payment. 95% LTV = 5% down payment. Always confirm your down payment requirement before committing funds.

Problem

Achieving MLI Select's 95% LTV requires meeting affordability, energy, or accessibility criteria. Missing these targets late in the process leaves you with only 85% MLI Standard financing.

Solution

Confirm upfront whether your project can meet MLI Select criteria with actual engineer quotes, rent rolls, and building assessments. Don't assume affordability units until rents are documented in the rent roll.

Problem

The insurance premium is added to your mortgage amount. If your premium is 7%, that increases your loan balance by 7%, which increases your expenses and lowers your cash flow.

Solution

Factor the insurance premium into your loan calculation. If you borrow $1M with a 7% premium, your actual loan is $1.07M. This affects your total monthly payment and must be included in DCR.

Problem

Lenders use the rent roll provided, but if you're using rents from 3 years ago, your qualification will be rejected when lenders verify current market rents.

Solution

Always use current market rent data verified by recent rent rolls, lease agreements, and third-party comps. If you're renovating units, get written quotes from property managers on post-renovation rents.