Reviewed by Nav Grewal, Principal Broker. Updated November 2026
CMHC insured versus conventional commercial mortgages in BC
The same rental building can be financed two ways in British Columbia, and the two routes differ on almost every line: how much you can borrow, how long you can amortize, what you pay, how long it takes and what you sign up to. This page puts them side by side so you can see which one your file is actually better off with.
The short answer
Insured financing gives a BC rental building more proceeds, a longer amortization and a cheaper rate, in exchange for a premium added to the loan, a process measured in months and conditions that run for at least a decade. Conventional financing is faster and unconditional, with less leverage and a higher rate. Neither is better in general; one is better for a given building on a given hold.
| CMHC insured | Conventional | |
|---|---|---|
| Eligible property | Rental housing of five units or more, plus student, seniors and supportive housing | Any income producing or owner occupied commercial property |
| Leverage | Up to 85 percent on standard insured, up to 95 percent under MLI Select at 100 points | Around 75 percent on multifamily, less on other asset classes |
| Amortization | Up to 50 years | Commonly 15 to 30 years |
| Debt service coverage | Underwritten to 1.10 under MLI Select | Typically 1.20 to 1.25 |
| Pricing basis | Spread over the Canada Mortgage Bond | Spread over the Government of Canada bond or prime, priced for credit risk |
| Premium | A percentage of the loan, normally added to the loan and financed | None |
| Time to fund | 3 to 5 months, with CMHC review of 8 to 12 weeks once the file is complete | 45 to 90 days end to end |
| Conditions | MLI Select commitments run at least 10 years, are monitored, and travel with the property | The loan agreement only |
What each route is
A conventional commercial mortgage is a loan from a bank, credit union, insurer, monoline or private lender that carries the credit risk itself. The lender underwrites the building's net operating income, applies its own coverage and leverage limits, and prices the spread to pay for the possibility that the loan goes bad. Any commercial property can be financed this way.
A CMHC insured mortgage is the same loan from the same kind of lender, with Canada Mortgage and Housing Corporation insuring the lender against loss. CMHC insures, it does not lend. Because the lender's exposure is covered, it can go further on leverage and amortization and price closer to the government curve. The route only exists for rental housing of five units or more and the other shelter models CMHC covers, and it comes in two forms: standard insured multifamily, with no outcome commitments, and MLI Select, where affordability, energy and accessibility points buy the top tier of leverage, amortization and premium discounts.
Leverage, amortization and coverage
This is where the gap is widest. A conventional multifamily file lands around 75 percent leverage, amortizes over 15 to 30 years and has to cover its payment by 1.20 to 1.25 times. Standard insured financing reaches 85 percent, and MLI Select reaches 95 percent at 100 points, amortizes over as long as 50 years and is underwritten to coverage of 1.10.
Those three levers compound. A longer amortization lowers the annual payment, a lower coverage test lets the same income support more debt, and a higher leverage cap stops being the binding constraint. On the same net operating income, the insured route often supports materially more loan than the conventional one, which is why insured borrowers can close with so much less equity. The commercial mortgage calculator sizes a building both ways from one set of inputs, and how DSCR sets your loan amount walks through the arithmetic.
How each one is priced
Conventional pricing is a spread over a benchmark, usually a Government of Canada bond for fixed money or prime for floating, and the spread pays for the asset, the leverage and the borrower. Insured multifamily is priced as a spread over the Canada Mortgage Bond, and because the lender is not compensating for credit loss the spread is tight. That is the whole reason insured rates sit inside conventional rates, and the gap is large enough to change what a building can carry. Current benchmarks and typical spreads by execution are on the BC commercial mortgage rates page, and the Canada Mortgage Bond page tracks the insured benchmark itself.
The premium is the price of the insured route
Conventional loans have no insurance premium. Insured loans carry one, charged as a percentage of the loan and normally capitalised into it, so you finance the premium over the amortization and pay interest on it. The schedule for standard rental housing steps up with leverage, and construction loans carry a higher rate than loans on existing buildings.
| Loan to value | Existing building | Construction |
|---|---|---|
| Up to 65 percent | 2.60 percent | 3.25 percent |
| Up to 70 percent | 2.85 percent | 3.75 percent |
| Up to 75 percent | 3.35 percent | 4.25 percent |
| Up to 80 percent | 4.35 percent | 5.00 percent |
| Up to 85 percent | 5.35 percent | 6.00 percent |
| Up to 90 percent (MLI Select only) | 5.90 percent | 6.75 percent |
| Greater than 90 percent (MLI Select only) | 6.15 percent | 7.00 percent |
A surcharge of 0.25 percent applies for each five year period of amortization beyond 25 years, and MLI Select points discount the result by 10 percent at 50 points, 20 percent at 70 points, 30 percent at 100 points. The CMHC premium calculator prices a specific loan, and what the premium costs explains what moves it.
Source: CMHC multi unit mortgage loan insurance premiums, effective July 14, 2025, checked September 18, 2026.
Time and conditions
A conventional file commonly funds in 45 to 90 days end to end. An insured file runs 3 to 5 months from engagement to funding, with CMHC's own review taking 8 to 12 weeks once the package is genuinely complete, because the lender and CMHC underwrite in sequence rather than in parallel. A closing date set on a conventional calendar is the most common way an insured deal goes wrong.
Conditions differ just as much. A conventional loan binds you to the loan agreement and nothing else. MLI Select commitments on rents, energy performance or accessibility run for at least 10 years, CMHC monitors them, and they travel with the property when you sell. Standard insured multifamily carries no outcome commitments, which is why it is often the right insured answer for an owner who wants the pricing without the decade of obligations.
Which route fits which file
Insured usually wins on a stabilized rental acquisition you intend to hold, on ground up purpose built rental, and on a refinance where the extra proceeds fund the next project. The rate and the amortization do the work, and the premium is recovered through debt service over the hold.
Conventional usually wins on a short closing, a short hold, a building that cannot meet the affordability rents without starving its income, a five unit property where the premium and the process outweigh the gain, and any property that is not rental housing. It also wins when the vendor will not wait.
Both, in sequence, is the answer when the deal has to close before CMHC can finish. Close on bridge financing or a conventional term, then take out into the insured loan. It is a legitimate structure, and it is not a faster insured approval.
When the honest answer is conventional
Insured financing looks better on paper on almost every rental building, and that is exactly when it needs modelling rather than assuming. If the extra proceeds only arrive by committing to rents the building cannot live with for a decade, the conventional loan with less leverage is the cheaper decision. If the hold is two or three years, the premium may never be recovered. And if the closing date cannot move, the insured route is a refinance plan rather than a purchase plan. We will tell you which of these you are looking at before either application starts.
Insured or conventional questions.
Keep reading
Go deeper on both routes
Which route is your building better off with?
Send the rent roll or the pro forma. We will model insured against conventional on your hold period and show you both numbers.