Index-Linked Mortgage (ILM) Program

Program Objective

To provide assistance for co-operative housing to promote security of tenure for households unable to access homeownership.

Exterior of Humberview housing co-operative

Program Features

  • Unilateral federal program
  • Income-mixing
  • NHA-insured long-term index-linked mortgage loan from private lender for 100 % of eligible project costs
  • Loan amortized over 30-35 years—real (i.e., after inflation) interest rate fixed for full period
  • Mortgage payment adjusted annually by rate of change in CPI, less 200 basis points
  • Annual operating assistance to reduce initial housing charges to a level equivalent to market-rental rates for similar accommodation
  • Subsidy adjusted up or down annually at the same rate as the ILM mortgage payment is adjusted
  • One-time reduction of assistance after year 15, if maximum occupancy charges are less than 85 % of market rental rate for similar accommodation—reduction equal to five % of housing charges, phased in as necessary
  • Co-operative-financed security of tenure fund to assist households whose incomes drop when no rent supplement is available
  • A stabilization fund to assist co-operatives in defined circumstances (lapsed)
  • Rent supplements available for maximum of 50 % of units under separate federal/provincial cost-shared rent supplement program (all provinces and territories)
  • Co-op to use its best efforts to house at least the minimum percentage of assisted households specified in operating agreements (in no case less than 15 %)

CMHC Authority under Operating Agreement

  • Right to register agreement or notice of it on title
  • Right to inspect co-op’s books, records and accounts at any reasonable time on reasonable notice
  • Right to inspect property and require remedial repairs
  • Canada Mortgage and Housing Corporation (CMHC) concurrence required for change in indexed replacement reserve contribution
  • Right to require annual information to assure itself of co-op’s compliance with fundamental purpose and obligations under operating agreement
  • Right to request explanations of information in audited financial statements and, for statistical purposes, other information readily available to co-op
  • CMHC approval required of any contract for management services, other than an employment contract
  • Various remedies in event of breach of operating agreement, including suspension or termination of assistance
  • CMHC approval required for investment of replacement reserve and security of tenure funds outside of eligible investments listed in agreement (does not apply during operating agreement extension)
  • Co-op may not mortgage or encumber property without CMHC’s approval.
  • Co-op may not sell or otherwise dispose of all or part of property without CMHC’s approval of the sale and disposition of proceeds.
  • Co-op may not lend or give away co-op funds, other than reasonable donations, or underwrite obligations of a third party, without CMHC’s approval (restriction does not apply to members’ capital and accumulated surpluses).
  • CMHC approval required for changes to incorporation documents and by-laws that would change co-op’s non-profit status
  • CMHC approval required to adjust the mortgage amortization period or make any prepayment of the ILM

Accountability Framework

  • Operating agreement
  • Annual audited financial statement and information return
  • Co-op fully responsible for operating results

Program Guidelines for ILM Co-ops


Q&A on the End of the ILM CMHC Operating Agreement - Ontario / PEI


Q&A for ILM Co-ops Post Year 15


Tip of the Month

Client Compliance

In 2008, 70% of Agency clients met every term of their CMHC operating agreement. Now 80% do. And compliance failures, great and small, are also fewer.