Fourplex or Sixplex? Why the Fifth Unit Is the Most Valuable One You Will Ever Build

Most people comparing Toronto multiplex sizes are comparing the wrong things. They look at unit counts, rent rolls and construction costs, and conclude that a sixplex is simply a fourplex with two more suites.

It is not. Somewhere between the fourth unit and the fifth, the project changes category — in the eyes of the only lender whose terms actually make small purpose-built rental work in this city.

The line is at five units

CMHC's MLI Select program has a minimum project size of five units. Below that, the program simply does not apply. A four-unit building is financed like a small commercial property. A five-unit project is financed like an apartment building.

Here is what crossing that line unlocks.

Points earned	Max LTC, new build	Max amortization	Recourse
50+	95%	40 years	Full
70+	95%	45 years	Full
100+	95%	50 years	Limited

Read the bottom row again. At 100 points, the loan is limited recourse — the lender looks to the asset, not to your other holdings — and the amortization runs half a century. Stretching amortization from 25 years to 50 roughly halves annual debt service on the same principal. On a marginal project, that is not an improvement. That is the whole deal.

The fourplex-plus-garden-suite route

Here is the part that changes the map, and it matters most if your lot is outside the nine sixplex wards.

In our experience, a garden suite counts toward the unit total CMHC uses for valuation and financing purposes. That means a fourplex plus a garden suite — five doors on one lot — reaches the five-unit threshold, even though the main building is capped at four units.

Now read that against the zoning. Four units are as-of-right city-wide. A garden suite is permitted in addition to them, under its own separate regulations, anywhere the rear yard supports one. Neither requires a variance.

So on a lot with the depth for a rear-yard building, MLI Select eligibility is reachable without a Committee of Adjustment application, without a rezoning, and without being in one of the nine wards.

For an owner in Etobicoke, York, North York or most of Scarborough, that is the single most useful sentence in this article.

Two practical notes. The suite has to be a genuine self-contained unit, and lot depth, tree protection and rear-yard landscaping decide whether it is buildable at all — the feasibility tests are set out in Garden Suites: The Seventh Unit. And as with any financing assumption, confirm the treatment with your lender at design stage, because the design follows from the answer rather than the other way round.

How the points are earned

MLI Select scores on three dimensions. You need 50 to qualify at all, and the tiers combine.

Affordability — the heaviest lever

Units let at or below 30% of median renter income, with a ten-year minimum commitment:

Level	Points	Share of units, new construction
Level 1	50	Minimum 10%
Level 2	70	Minimum 15%
Level 3	100	Minimum 25%

A commitment of twenty years or more adds a further 30 points.

Now look at what that means on a small building. On a sixplex, 25% of units is 1.5 — call it two suites out of six held at a defined affordable rent for a decade or more. In exchange: 95% loan-to-cost, fifty-year amortization, limited recourse. On a four-unit project with nothing else on the lot, that trade is not available at any price, because the program does not apply.

Energy efficiency — and a deadline you need to know about

Energy performance awards 20, 35 or 50 points. CMHC tightened the criteria effective November 28, 2025, incorporating the 2020 National Building Code and the National Energy Code for Buildings. New construction now requires:

• Level 1: 25% better than NECB Tier 1 (or 20% better than NBC Tier 1)

• Level 2: 50% better than NECB Tier 1 (or 40% better than NBC Tier 1)

• Level 3: 60% better than NECB Tier 1 (or 70% better than NBC Tier 1)

The transition period runs to September 30, 2026. Applications submitted before that date may still qualify under the prior criteria. If you are contemplating a five- or six-unit build and energy points are part of your path to 100, that deadline is live right now.

Accessibility

Awards 20 or 30 points. All buildings must be 100% visitable per CSA B651:23. The point-earning tiers require a minimum of 15% accessible units, or 15% accessible plus 85% universal design.

Side by side

	Fourplex	Fiveplex / Sixplex
Where permitted	City-wide as-of-right	Nine wards as-of-right; variance elsewhere
Building type	Detached, semi, row	Detached only
Height	10.0 m minimum permitted	10.5 m
Bedroom cap	12 (3 per unit)	15 / 18 (3 per unit)
Development charges	Zero on units 2–4	Zero on units 2–6
CMHC MLI Select	✗ Not on four units alone — ✓ add a garden suite and you are at five	✓ Qualifies
CMHC construction loan (ACLP)	Five-unit minimum — same garden suite arithmetic applies	✓ Subject to $1M minimum loan
Purpose-built rental HST rebate	✓ Qualifies at 4 units	✓ Qualifies
Complexity	Lower. Simpler approvals, smaller raise.	Higher. Affordability covenant, energy modelling, more paper.

The construction loan question

MLI Select is the takeout. Getting the building up is a separate problem, and CMHC's Apartment Construction Loan Program also starts at five units.

ACLP term	Detail
Minimum units	At least 5 rental units
Loan-to-cost	Up to 100% of residential space, varying with application strength
Interest rate	Fixed, locked at first advance
Amortization	Up to 50 years
Minimum loan	$1 million
Affordability condition	At least 20% of units at or below 30% of median family income, maintained 10+ years

That 20%-for-a-decade covenant is a real constraint on a six-unit building — it is two suites. We would treat ACLP as one option among several rather than the default, and we have not been able to confirm from CMHC's published materials whether the program is still accepting applications in 2026 or is fully committed. Confirm before you build a plan around it.

What it costs to use the program

MLI Select is insurance, and insurance has a premium. For standard rental housing, by loan-to-value:

LTV	Premium
65% or less	2.60%
70% or less	2.85%
75% or less	3.35%
80% or less	4.35%
85% or less	5.35%
90% or less	5.90%
Above 90%	6.15%

Add 0.25% of the net loan for every five-year period beyond 25 years of amortization — so a fifty-year amortization carries roughly 1.25% in surcharge. The application fee is $150 per unit for the first hundred units.

On a five- or six-unit building that is a meaningful line item, and it is usually added to the principal rather than paid in cash. The correct way to look at it is as the cost of buying fifty-year money at 95% of cost, which is not available anywhere else.

Two 2025–26 changes worth knowing

• Premiums were restructured effective July 14, 2025, moving to a standardized approach across multi-unit products with pricing adjusted for loan-specific risk, and a new discount schedule that rewards affordability, accessibility and energy outcomes.

• Rental achievement holdbacks now apply to new construction where LTV exceeds 95% and the debt service ratio falls below 1.2. Plan the lease-up, not just the build.

The minimum debt coverage ratio is 1.10 for standard rental housing.

So which should you build?

The honest answer depends on three things, in this order.

Your ward. If your detached lot is in one of the nine wards, five or six units in the main building is as-of-right and the question is mostly about capital and appetite. If it is not, your cleanest path to five units is a fourplex plus a garden suite — no variance, no rezoning.

Your lot. Six units within a 10.5 m envelope, a 17 m depth limit and a three-bedroom-per-unit cap needs frontage and depth to work. A rear-yard suite needs depth of its own: the main building, a 5.0 m separation, the suite, then a rear setback. Depth usually decides the shape of the project before anything else does.

Your capital. If you can carry a four-unit build without CMHC, it is a simpler, faster project with fewer covenants. If the financing is what makes the deal possible, then reaching five doors is not optional — it is the entire structure, whether you get there through a fiveplex, a sixplex, or a fourplex with a suite behind it.

How VIP Condos Toronto helps close the gap

We are not the builder and we are not the general partner. We are the brokerage that has done the vetting, and that is the value we bring to this.

Our bench of contractors and consultants is pre-vetted for the thing that actually matters: whether they build multiplexes as their core business, repeatedly, with standing crews and common plans — or whether yours would be their first. One GP corporation we work with is operated by a principal with more than thirty years of construction and development management experience, whose related entities have delivered over three million square feet and more than $5 billion of development value, and which is now structured as a vertically integrated operation dedicated to multiplex projects: planning, development, financing, construction, lease-up, stabilization, operation and sale.

We do not publish our partners' corporate names here. If you are weighing a project and want to know exactly who you would be building with — the principals, the completed projects and the references — contact Frank Merigliano directly at 416-885-0172 or frank@vipcondostoronto.net and we will make the introduction.

We introduce clients into that bench either as 100% owners with a turnkey fixed-price contract, or as limited partners in a GP/LP structure. We will tell you honestly which one fits your situation, including when the answer is that neither does yet.

Related reading: 100% Ownership or GP/LP Partner? and Toronto's Multiplex Playbook for 2026.

Frequently Asked Questions

Does a garden suite count toward the five-unit CMHC minimum?

In our experience, yes — it counts toward the unit total for CMHC valuation and financing purposes. That makes a fourplex plus a garden suite a five-unit project, and it is the route to MLI Select eligibility on a lot where the main building is capped at four units. Confirm the treatment with your lender at design stage, as you would with any financing assumption.

Can I convert a fourplex to a fiveplex later to qualify?

On the right lot, yes — and in one of the nine wards it may not even need a variance. But MLI Select underwrites the project as presented, and a mid-stream change to unit count affects the construction loan, the insurance application and the affordability covenant. Plan the end state at the start.

Is MLI Select being paused or cancelled?

We searched specifically for a CMHC notice of any pause, cap or suspension and found none as of September 2026. That is the absence of evidence, not confirmation of continuity. Programs change; confirm current status with a CMHC-approved lender before you underwrite.

What does the affordability commitment actually cost me?

It is the gap between market rent and the capped rent on the committed units, for at least ten years. On a sixplex at Level 3, that is roughly two suites. Model it as a real reduction in net operating income — then weigh it against fifty-year money at 95% of cost. On most small projects the trade favours taking the points, but it is arithmetic, not doctrine.

This guide is for general informational purposes and does not constitute legal, financial, or tax advice. CMHC program terms, premiums and criteria change; confirm all current figures and the treatment of any specific unit with a CMHC-approved lender. Every situation is different — always consult a licensed real estate professional, lawyer, and tax advisor before making any decisions.

Ready to Take the Next Step?

Create your free, secure account at www.VIPCondosToronto.net for full MLS access, real-time sold data, and VIP pre-construction pricing and floor plans — the same tools our team uses every day.

For personalized advice on your specific Toronto buying or selling situation, contact Frank Merigliano and the VIP Condos Toronto team directly:

• Phone: 416-885-0172

• Email: frank@vipcondostoronto.net

• Web: www.VIPCondosToronto.net

Frank Merigliano, Team Leader / Sales Representative, VIP Condos Toronto, RE/MAX PREMIER INTERNATIONAL INC., Brokerage — licensed since 1993, with RE/MAX since 1995, and a Top 50 RE/MAX team in Canada since 2015.

Sources: CMHC, MLI Select; CMHC, MLI Select program summary (PDF); CMHC, Multi-unit fees and premiums at a glance (PDF); CMHC notice, multi-unit premium update July 2025; CMHC, Apartment Construction Loan Program — Standard Rental Housing; CMLS, CMHC lending program update (November 2025 criteria changes); Toronto City Council item 2025.PH22.3 (bedroom caps); Toronto City Council item 2025.MM32.5 (development charge exemption).