Introduction: The Myth of Needing 25% Down Is Officially Busted
If you’ve ever looked at a multi-family property and thought, “I’d love to buy it, but I don’t have 25% down,” you’re not alone.
That mindset has likely kept many smart investors on the sidelines.
But here’s the truth: You don’t always need 25% down.
Thanks to CMHC-insured financing programs like MLI Select, you can get into 5+ unit apartment buildings with as little as 5–15% down if you qualify.
And in cities like Calgary and Edmonton, where cap rates are still high and property values are affordable by national standards, this strategy can be your on-ramp to serious wealth-building.
Let’s break down how it works and how to make it work for you.
💼 1. Understanding CMHC-Insured Financing: Your New Best Friend
CMHC (Canada Mortgage and Housing Corporation) offers loan insurance to lenders for multi-family residential properties. That makes lenders more willing to offer high-leverage loans at better rates and longer amortizations.
The flagship program? CMHC MLI Select.
With MLI Select, you can unlock:
- Up to 95% loan-to-value (LTV)
- Amortizations up to 50 years
- Lower insurance premiums (if your building qualifies for affordability, accessibility, or energy efficiency criteria)
- Lower interest rates due to insured status
The key is to buy or build a property that meets CMHC’s guidelines and prepare a solid application package.
🏘️ 2. Who Qualifies for 5% Down?
To hit the 95% LTV mark, you’ll need your property to meet MLI Select’s scoring system, which is based on:
- Energy efficiency improvements (or new builds meeting certain standards)
- Affordability, e.g., 20–30%+ of units rented at below-market rates
- Accessibility features for tenants with disabilities
Newly built four-plexes and larger apartment buildings in Alberta often qualify with strong energy ratings or as affordable units. Partnering with an experienced broker or CMHC consultant can help ensure you hit the thresholds.
💡 3. Leveraging Vendor Take-Backs (VTBs): When Sellers Help You Buy
If CMHC gets you close but not all the way there, another option is the Vendor Take-Back mortgage (VTB), where the seller finances a portion of the purchase price.
This works especially well when:
- The seller owns the building outright or has low debt
- The property needs some upgrades (sellers may offer VTBs to sweeten the deal)
- You want to preserve cash for renovations or reserves
For example, if CMHC finances 85%, and the seller agrees to hold 10% as a second mortgage, you only need to bring 5% cash to the table.
🤝 4. Joint Ventures: Split the Down, Split the Upside
Another powerful strategy? Bring in a partner.
If you find a strong deal but are short on down payment, a joint venture (JV) structure allows you to team up:
- One partner provides capital
- One partner handles acquisition, financing, and management
- You split cash flow, equity, and responsibilities
This is common in Alberta’s real estate scene, especially for newer investors who are “deal finders” but need help with capital.
📉 5. High Leverage Means High Responsibility. Don’t Skip the Math
Using 5% down might sound exciting (and it is), but it’s only smart if the numbers still work out.
That means analyzing:
- Net Operating Income (NOI)
- Monthly debt payments (P&I)
- Cash-on-cash return
- Debt coverage ratio (DCR)
Even with cheap financing, cash flow can get tight when you’re highly leveraged. Use conservative rent projections and build in a vacancy buffer.
In Alberta, where cap rates are generous (5.5% to 6.5%), the numbers often work, but only if you’re disciplined.
🏁 Final Word: You Don’t Need Deep Pockets to Start, You Need the Right Strategy
5% down isn’t a myth. It’s a genuine, federally backed opportunity, especially in Alberta, where rents are rising and inventory is in short supply.
Whether you’re buying a 6-plex in Edmonton or a new-build 12-unit in Calgary, you can leverage CMHC’s tools, creative financing, and joint venture partnerships to scale your portfolio faster, without draining your bank account.
