Ministerial Loan Guarantees
Ministerial Loan Guarantees are used to secure loans to build, purchase or renovate on-reserve housing.
About Ministerial Loan Guarantees
The Government of Canada supports on-reserve housing through Indigenous and Northern Affairs Canada and the Canada Mortgage and Housing Corporation (CMHC). The department provides Ministerial Loan Guarantees for the loan security required by lenders who are financing housing loans on-reserve. CMHC provides about 70 per cent of these loans and 30 per cent are provided by other lending institutions.
In 1966, Indigenous and Northern Affairs Canada was first granted authority by Parliament to provide lenders with government-backed security for loans issued on-reserve. In response to population growth and increased need for housing loans the department’s authority is currently at $2.2 billion.
First Nations land is held by the Crown for the use and benefit of First Nation communities. Section 89(1) of the Indian Act protects property on reserves so it cannot be mortgaged and used as collateral by a non-First Nation person. Indigenous and Northern Affairs Canada issues loan guarantees to lenders to secure on-reserve housing loans and minimize risk in the case of a loan default.
The authority to issue Ministerial Loan Guarantees for housing on reserves is currently delegated by the Minister of Indigenous and Northern Affairs to designated regional representatives. All regional offices are responsible for managing and administering their portfolio through the Guaranteed Loan Management Module of the Grants and Contribution Information Management System.
Who can apply?
Ministerial Loan Guarantees may be issued to a First Nation acting on its own behalf or on behalf of an individual First Nation member that meet the eligibility criteria.
There can only be one loan guarantee per project. If the First Nation is under third party management, no Ministerial Loan Guarantee will be issued.
Ministerial Loan Guarantees are issued throughout the year, as necessary.
How to apply?
Each request for a loan guarantee must be assessed and approved by the regional office against the application requirements and eligibility criteria:
- to apply for individual homeownership, consult the Ministerial Loan Guarantee Toolkit for individual homeownership
- to apply for First Nation housing projects, consult the Ministerial Loan Guarantee Toolkit for First Nation housing projects
- to apply as a resident of Quebec, consult the Toolkits for Quebec
The application review process takes approximately six weeks if all application requirements and eligibility criteria have been met. This ensures that the risk of defaults is minimized and to prevent undue fiscal pressures on First Nation communities as well as on Indigenous and Northern Affairs Canada.
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