LTV and lending value — how CMHC values the property.
For new construction, CMHC sizes loans against loan-to-cost (LTC) — total project cost, including land, hard, soft, and financing. For existing property, CMHC sizes against the lesser of purchase price or CMHC lending value, determined by an independent appraiser using three market valuation methods.
As of November 2024, appraisals are mandatory for all multi-unit applications regardless of size. The appraisal must be commissioned by the approved lender (not the borrower), use all three methods (income, comparable sales, cost), and have an effective date within 12 months.
New construction vs. existing property.
CMHC uses different value concepts depending on whether the project is being built or is already stabilized.
Loan sized against total project cost — land acquisition, hard costs (construction), soft costs (design, permits, consultants), financing costs (interest during construction), and a CMHC-reviewed contingency. Land is typically valued at lesser of acquisition cost or independent land appraisal.
For a purchase, CMHC takes the lesser of the agreed purchase price or the appraised CMHC lending value. For refinance, it's the appraised lending value. Value is determined using all three methods (income, sales comparable, cost) and reconciled into a single figure.
How CMHC lending value is built.
Every CMHC appraisal reconciles across three market valuation methods. Weight varies by property type and stage — income approach dominates for stabilized apartment buildings, cost approach dominates for new construction.
Capitalizes stabilized NOI at a market-derived cap rate. Typically the most-weighted approach for stabilized apartment buildings. Cap rate is triangulated from recent comparable sales, broker surveys, and published indices.
Recent arm's-length transactions of similar properties adjusted for unit count, age, quality, location, and in-place rents. Useful as a sanity check against the income approach.
Replacement cost of improvements plus land value, less depreciation. Typically the lowest-weighted approach for multi-family but serves as a floor and is required for the three-method reconciliation.
Mandatory appraisals on every application.
Before November 2024, smaller loans could proceed on a desktop valuation. That exemption was eliminated — every multi-unit application now requires a full appraisal regardless of size. The appraisal must be commissioned by the approved lender (not the borrower) from an AIC-designated independent appraiser.
The change added roughly $15–30K to application costs and 1–2 weeks to timelines at the low end of the market, and is the single biggest structural change to small multi-unit underwriting in the last decade.
See full policy timeline →- Applicability
- All multi-unit applications (≥5 units) — no size exemption
- Methods
- All three (income, comparable sales, cost)
- Effective date
- Within 12 months of application
- Appraiser
- AIC-designated (AACI or P.App) independent
- Commissioned by
- Approved lender — not the borrower
- Typical cost
- $8,000–$25,000+ depending on property size