Four units gets you a bank loan. Five gets you a federal housing program. The line between them decides how much cash you need, what your payments look like, and whether the project happens at all.
There is a number in Canadian rental financing that matters more than any interest rate, and it's not a percentage. It's five. CMHC's MLI Select program — the financing that makes small rental buildings viable — starts at five self-contained units. At four units you are a landlord asking a bank for a commercial loan. At five you are rental housing supply, and the federal government wants your building built.
Here's what the line looks like on a typical Toronto project — same lot, same construction cost, one unit of difference:
| 4 units — conventional | 5 units — MLI Select | |
|---|---|---|
| Loan-to-cost | 65–75% | up to 95% |
| Amortization | 25 years | 40 years |
| Rate | commercial (higher) | insured (≈1–1.5% lower) |
| Coverage test | rents ÷ 1.20–1.25 | rents ÷ 1.10 |
| Your down payment | cash — often $500K+ | the land you already own |
| During construction | monthly interest out of pocket | interest capitalized — no payments |
Run the loan math and the gap is brutal. A five-unit building netting $140,000/year of operating income supports roughly $2.6M of MLI Select debt. The identical building financed conventionally — stricter coverage test, 25-year amortization, higher rate — supports around $1.5–1.7M. Same rents. Same bricks. A million dollars of difference in what the project can borrow, which means the difference lands on you, in cash.
Most Toronto lots outside the sixplex wards allow four units in the main building. The fifth door is usually a garden suite — a separate small home in the rear yard, permitted city-wide under its own by-law. This is why we obsess over garden-suite feasibility on every site read: the suite isn't a nice-to-have, it's the key that unlocks the entire financing structure. A lot where the suite fits cleanly is a five-door lot; a lot where fire access or depth kills it may be stuck at four — and stuck with the left column of that table.
In Toronto's nine sixplex wards the main building itself can hold five or six units — no garden suite required. Same program, more doors, better math. Which ward you're in matters more than almost anything about the house currently on the lot.
If your lot supports five doors, you're deciding between a project that mostly finances itself and one that consumes your savings. If it only supports four, the honest answer might be that building isn't your best move — and a good builder should tell you that instead of selling you a fourplex with a payment problem. The five-unit test is the first thing we check on any address, before design, before pricing, before anyone falls in love with a drawing.
Free site read on any Toronto address: doors, zoning path, and the honest financing math — usually within a day.
Get a Site ReadFigures are planning estimates as of September 2026 — not lender commitments or financial advice. Program terms are set by CMHC; loan sizing is determined by lender underwriting on each project's own numbers.