CMHC launches mortgage insurance for prefab housing
CMHC expands mortgage insurance to support prefab and modular construction. CMHC press release, May 2026. The program is called CMHC Prefab Plus.
Uytae Lee has a video (Why is it So Hard to Mass-Produce Housing?) from about a year ago, talking about some of the challenges in scaling up prefab and modular housing. One of them is financing. He explains:
Buildings are expensive to build, so most developers take out a loan from a bank to build them. Now, banks like to give out those loans in increments based on certain milestones. If you pour your foundation, you get a bit of money. Build the framing, more money. Finish the roof and cladding, even more money.
But this process is really at odds with prefab housing. Up to 80% of a prefab project is completed at the factory. So, prefab companies usually ask for a much larger payment upfront.
That results in a kind of Catch-22 situation. The prefab housing factory wants payment before the home leaves the factory, but the bank won’t release those funds unless the building is actually on the site and connected to services.
Solving this problem will require new kinds of loans from banks and other lenders.
Last month CMHC announced a mortgage insurance program, Prefab Plus, for prefab housing. Specifically, the schedule of advances is more closely tied to milestones that make sense for prefab homes.
First advance: Land acquisition and site preparation costs including excavation, foundation construction and septic/well installation as required.
Second advance: Prefabricated unit cost on delivery.
Third and fourth advances: Post installation and finishing costs.
Of course in Vancouver, I’m particularly interested in multi-unit projects.
Modular construction is when a housing project is built using modules that are built off-site, then transported to the property and assembled on-site. Following a successful pilot initiative, which saw insured financing provided for more than 800 new rental homes leveraging modular construction across five provinces, CMHC is expanding its multi-unit mortgage loan insurance to allow modular construction for all its multi-unit products, including MLI Select.
The successful pilot initiative included 605 Studio West in Calgary, an 84-unit affordable housing complex developed by Attainable Homes Calgary (AHC). AHC is a non-profit social enterprise owned by the City of Calgary focusing on improving housing affordability through the development of city-owned land. Modular construction allowed 605 Studio West to be built and occupied in under one year, whereas a comparable, conventionally built project in the same community took nearly two years to complete.
There’s a video:
More
A New Blueprint: How Modern Methods of Construction can help solve Canada’s housing crisis. Stephanie Shewchuk, RBC, May 2026.
A similar report by the Fraser Valley Real Estate Board. Modular housing in Calgary.
Brian Potter’s blog Construction Physics is entirely devoted to the question of productivity in the construction sector. He observes that there's been a lot of attempts to make homebuilding more like manufacturing. Another Day in Katerradise. A History of Operation Breakthrough.
A recent startup that looks particularly interesting, the American Housing Corporation:
Unlike many venture-backed housing start-ups that attempt to sell new construction technology to traditional developers, the American Housing Corporation decided to vertically integrate from the start. The company buys land, manufactures building components, acts as the general contractor, and ultimately sells or rents the homes itself.
The company uses structural insulated panels — thick, energy-efficient wall sections with mechanical, electrical, and plumbing systems already installed. The panels are fire-resistant and perform like masonry or steel for buildings up to three stories. The key innovation is that the American Housing Corporation built its own press to produce panels in dimensions that fit inside standard shipping containers, allowing the company to manufacture in one location and ship economically across the country. This solves a major limitation of modular construction, which typically requires that factories be located near building sites.