Secondary Suite Financing in Canada (2026): The $80,000 Loan That Never Launched, and the 90% Insured Refinance That Did

Secondary Suite Financing in Canada (2026): The $80,000 Loan That Never Launched, and the 90% Insured Refinance That Did

Short answer: There is no $80,000 federal loan to apply for. The Canada Secondary Suite Loan Program was announced in Budget 2024 at $40,000, doubled to $80,000 at 2% over 15 years in December 2024, and promised for early 2025. No application process ever opened, and industry reporting on Budget 2025 records the program as discontinued without a single loan advanced. The federal financing that does exist is different in kind: since January 15, 2025, a homeowner can refinance with mortgage insurance to build a secondary suite, borrowing up to 90% of the home's as-improved value, with the property's as-improved value under $2 million, a maximum of four units in total, and amortization up to 30 years. The money can only pay for the project, CMHC says insured financing must be approved before construction starts or at an early stage, and the suite cannot be rented for periods under 90 consecutive days. If your plan still has a line in it for a 2% federal loan, delete the line and rebuild the plan around the refinance, or around the conventional options compared below.

This is education only, not mortgage, tax or legal advice. Program rules sit with the Department of Finance, the mortgage insurers and your lender, and municipal rules decide whether a suite can exist on your lot at all. Confirm every parameter on the sources at the end of this guide and with your own lender before you sign a contractor.

Two announcements, one program

The confusion is built into the history. Both measures were announced in the same season, described in the same speeches, and aimed at the same basement. They were never the same product.

Measure	Announced terms	What happened
Canada Secondary Suite Loan Program	Direct loan from CMHC, first announced at up to $40,000 in Budget 2024, then doubled to $80,000 at a fixed 2% rate over a 15-year term in the December 2024 Fall Economic Statement, launch promised for early 2025	Never opened. CMHC published no application process and advanced no loans. Budget 2025 reporting records the program as discontinued, with overlap with the insured refinance given as a reason
Insured refinance for secondary suites	Refinance an insured mortgage to build additional units: up to 90% of the as-improved value, as-improved value under $2 million, up to four units total, amortization up to 30 years, additional financing capped at project costs	Launched January 15, 2025. Available through lenders and mortgage insurers, including CMHC, under the parameters the Department of Finance published on October 8, 2024

Search results, contractor websites and a fair number of social posts still describe the $80,000 loan in the present tense, as if an application window were about to open. Treat any page that invites you to apply for it, or any intermediary offering to secure it for a fee, as a red flag. There is no window. The refinance is applied for through a lender, the way any mortgage is, and no third party can sell you access to it.

The practical cost of the mix-up is time. A homeowner who spent 2025 waiting for the loan program was waiting while construction prices, contractor schedules and their own mortgage term kept moving. The refinance has been available the whole time, and it has one timing rule that punishes waiting in a different way, covered in its own section below: approval has to come before the build, not after.

What counts as a secondary suite for this financing

The Department of Finance parameters and CMHC's product page use the same core definition. The new unit must be fully self-contained, with its own living space, kitchen and bathroom facilities, and it must comply with the bylaws and regulations that apply where it sits. A basement apartment with a separate entrance is the standard example. A laneway home and a garden suite are the detached examples. An in-law suite inside the existing home qualifies on the same basis, provided it is genuinely self-contained.

Three consequences follow from that definition.

First, a finished basement is not a suite. A recreation room with a bathroom and a bar fridge fails the self-contained test and the building code test that sits behind it: fire separation between units, safe exits, and the other code requirements for a separate dwelling. The gap between finishing a basement and building a legal suite is where most budgets in this category are understated.

Second, the municipality goes first. Zoning has to permit the unit on your lot before a lender or insurer will treat it as a legal unit. Cities across Canada have widened permissions for additional units in recent years, often under Housing Accelerator Fund agreements, but permission varies by lot, by servicing and by city. Get the municipal answer in writing before you price drawings.

Third, the use is restricted. Under CMHC's terms, the suite must not be used as a short-term rental, defined as a rental for any period of less than 90 consecutive days. A plan built on nightly or monthly tourist rentals does not fit this financing, whatever the projected nightly rate says. Long-term rental, or housing a close relative, is the use the program was built for.

The insured refinance: the full rule set

The parameters below come from the Department of Finance release of October 8, 2024, which set the terms for lenders and insurers, and from CMHC's refinance product page. Other insurers offer the same product under the same federal parameters, so the rule set does not change if your lender uses a different insurer.

Parameter	Rule
Who can apply	Borrowers who already own their property
Occupancy	The borrower or a close relative must occupy one of the current units
Purpose	Construction of additional self-contained unit(s) only
Maximum loan-to-value	Up to 90% of the property value, including the value added by the new suite(s), combined with any other loans secured by the property
Maximum property value	The as-improved value must be less than $2 million
Maximum units	Four dwelling units in total, including the existing unit
Maximum amortization	30 years
Additional financing cap	The new money must not exceed the project costs
Equity take-out	Not permitted. CMHC states the additional financing must only be used to facilitate construction and completion of the project
Short-term rental	Not permitted. CMHC sets the line at rentals of less than 90 consecutive days
Timing	CMHC: insured financing must be approved prior to the start of construction, or at least at an early stage
Other criteria	All other eligibility criteria for government-backed mortgage insurance continue to apply, including debt-service and credit requirements

Two of these rules do most of the work, and both are easy to miss in a headline that stops at 90%.

As-improved value is the engine. A conventional refinance in Canada stops at 80% of what the home is worth today. This product values the home as if the suite were already built, then allows 90% of that higher number. The borrowing room comes from work that has not happened yet, which is precisely why the insurer wants approval, appraisal and project costs settled before the work begins.

The project cost cap is the brake. Ninety percent of as-improved value is a ceiling, not an entitlement. The additional financing cannot exceed the cost of the project, and CMHC expects every dollar of the new money to be tied to creating the suite. You cannot round the loan up and use the surplus for a vehicle, a debt consolidation or the down payment on another property. Files built on that assumption fail at underwriting, late and expensively.

The approval-before-construction rule

CMHC states the timing plainly on its product page: insured financing must be approved by CMHC prior to the start of construction, or at least at an early stage. Read that as a sequencing rule for the whole project.

A homeowner who renovates first and refinances second has, in the insurer's framing, already spent the money the program exists to fund, on a unit whose costs can no longer be verified the same way. Some files may still be salvageable at an early stage, on CMHC's wording, but a completed suite presented for financing after the fact is the weakest version of this application.

The safe sequence runs in this order:

1. Confirm with the municipality, in writing, that a self-contained additional unit is permitted on the lot.
2. Get a realistic project budget from plans and contractor pricing, not from a per-square-foot guess.
3. Take the budget, the existing mortgage details and the property to a lender or mortgage broker and ask specifically for the secondary suite insured refinance, by name.
4. Complete the insurer approval and the as-improved appraisal before signing a construction contract that commits you.
5. Build, with advances and inspections handled the way your lender's approval specifies. Our construction mortgage guide explains how progress draws and holdbacks work when a lender funds a build in stages.
6. Rent the unit on terms of 90 consecutive days or longer, or house a qualifying relative, and keep the paper file: permits, invoices, appraisal, lease.

Reversing steps 4 and 5 is the single most common way this financing goes wrong, and it goes wrong silently. Nothing about a renovation announces that a financing door closed while the drywall went up.

A complete worked example

Every dollar figure in this section is a labelled hypothetical, built to show the mechanics. The rates and rents are illustrations, not quotes or market data.

The property. A detached home worth $750,000 today, with an existing mortgage of $560,000. The owners want to build a legal basement suite. Contractor pricing for the project, including the code work that makes the unit self-contained, comes to $150,000. An appraiser values the home with the finished suite at $900,000. That as-improved figure is an assumption of this example; in a real file the appraiser sets it, and the lender uses the value the insurer accepts.

Why a conventional refinance fails here. A conventional refinance caps the total mortgage at 80% of the current value: 0.80 x $750,000 = $600,000. Against the existing $560,000 mortgage, that frees $40,000. The project needs $150,000. The shortfall is $110,000, and no amount of rate shopping changes it, because the cap is a loan-to-value rule, not a price.

How the insured refinance fits. The ceiling is 90% of the as-improved value: 0.90 x $900,000 = $810,000. The project cost cap then sets the actual new money at $150,000. The refinanced mortgage is $560,000 + $150,000 = $710,000, which sits under the $810,000 ceiling, on a property whose as-improved value of $900,000 is under the $2 million limit, with two units in total against a maximum of four. The file fits every parameter in the table above, provided the owners occupy the main unit, the suite is legal and self-contained, and the approval lands before construction starts.

What the new mortgage costs per month. At a labelled hypothetical rate of 4.50%, with Canadian semi-annual compounding, a $710,000 mortgage costs:

Amortization	Monthly payment	Total interest if held for the full amortization
30 years	$3,579.93	$578,775
25 years	$3,929.66	$468,897

The 30-year option, which this program makes available on a refinance, cuts the payment by $349.73 a month against the 25-year option on the same balance. Held for the full term, it costs $109,878 more in interest. That is the real trade the program offers: monthly room now, in exchange for a larger interest bill across three decades. Prepayments in good years are how borrowers take the first half of that trade without paying the second half in full. Our mortgage prepayment privileges guide sets out how those privileges work on a Canadian mortgage.

The qualification check behind the example. The new payment is not the number the lender qualifies you at. Insured mortgages still have to pass the standard tests: the stress test at the higher of the contract rate plus 2% or the federal benchmark floor, and the gross and total debt service limits of 39% and 44% that apply to insured lending. Our stress test guide and our GDS and TDS guide work through both sets of math. A file can fit every suite parameter in this guide and still fail on income. Run the qualification numbers before the design numbers.

Costs the headline rate leaves out

The refinance replaces your mortgage. That sentence carries three costs that suite budgets routinely miss.

The insurance premium. An insured refinance carries a mortgage default insurance premium, set by the insurer from the loan amount, the loan-to-value and the amortization, with longer amortizations priced higher than shorter ones. The premium is normally added to the loan balance, and in Ontario, Quebec, Saskatchewan and Manitoba, provincial sales tax on the premium is payable in cash at closing and cannot be added to the loan. Our CMHC premium guide publishes the standard premium tiers and the tax table. Get your premium as a dollar figure from your lender before you commit, not as a percentage you estimate at the kitchen table.

Breaking the existing term. If your current mortgage is mid-term, refinancing with a new lender, or restructuring with the same one, can trigger a prepayment charge. On a fixed-rate mortgage that charge can run to thousands of dollars, and it lands on top of the project budget. It belongs in the project cost comparison from day one. Our prepayment penalty guide explains how the two standard penalty methods work and why the posted-rate method produces the large numbers.

The soft costs around the build. Appraisal on an as-improved basis, legal fees to discharge and register the new mortgage, permit fees, design and drawings, and the utility and servicing work a legal unit requires. None of these is the contractor's headline number, and together they are large enough to decide whether the project cost cap in your approval actually covers the project. Keep a contingency line inside the budget you take to the lender. An approval capped at a budget that was understated by 15% leaves you funding the last 15% from somewhere else, at whatever terms you can get mid-build.

The alternatives, priced against the same project

The insured refinance is not the only way to pay for a suite, and for some owners it is not the right one. An owner who cannot meet the occupancy rule, who wants the unit for short-term rental where the municipality allows it, or whose as-improved value clears $2 million needs a different route. The table below uses the same $750,000 home, $560,000 mortgage and $150,000 project as the worked example.

Route	How much it can raise on this property	Main conditions	Where it fits
Insured secondary suite refinance	$150,000 (project cost), new mortgage $710,000	Approval before construction, occupancy by borrower or close relative, no short-term rental, as-improved value under $2 million, four units maximum	The only route that values the home as if the suite already existed
Conventional refinance to 80%	$40,000 headroom over the existing mortgage	Standard refinance rules, current value only	A small project, or a top-up alongside savings
HELOC	Limited room: a standalone HELOC is capped at 65% of value, and combined secured borrowing at 80%, so the existing mortgage leaves little space on this property	Revolving credit, interest-only payments available, rate floats with prime	Flexible draws for a phased project where the mortgage itself is best left alone. See our home equity guide for the 65% and 80% limits
Second mortgage	Set by the second lender's appraisal and pricing, not by a federal program	Sits behind the first mortgage, higher rate and fees, shorter terms	A gap that is small and temporary, with a clear plan to fold it back into a first mortgage. See our second mortgage guide
Savings, staged over time	Whatever the household can set aside	No approval, no interest cost, slowest route	A project that can be split into stages without breaking code or permit sequencing
Multigenerational Home Renovation Tax Credit	A tax credit, not financing: 15% of up to $50,000 of eligible expenses, to a maximum credit of $7,500	The new self-contained unit must be for a qualifying relation who is a senior or an adult eligible for the disability tax credit, under CRA rules	A family suite that also qualifies reduces the net cost after the fact. It does not fund the build up front

Read the table by constraint, not by rate. The insured refinance wins the example because it is the only row that counts value the suite has not created yet. Remove the as-improved feature, for instance on a property already over the $2 million line, and the ranking changes completely: the project then has to fit inside 80% of today's value, inside HELOC room, or inside savings.

Does the rent carry the borrowing?

A suite project is usually sold, to a spouse, a partner or oneself, on one sentence: the rent will pay for it. Test the sentence against the incremental borrowing, not against the whole mortgage. In the worked example, the new money is $150,000. Borrowed on its own at the same labelled hypothetical 4.50% over 30 years, $150,000 costs $756.32 a month in principal and interest.

That $756.32 is the floor the rent has to clear before the project starts paying for itself, and it is not the whole bill. A rented unit also carries costs the main home did not: landlord insurance, the rental share of utilities the owner pays, maintenance and repairs inside the unit, and empty weeks between tenants. Use your own figures, but use all of them. A simple monthly test looks like this, with the rent and operating costs below labelled as hypothetical placeholders, not market data:

Line	Hypothetical monthly amount
Rent	$1,600
Less: payment on the incremental $150,000 at 4.50% over 30 years	-$756
Less: added insurance, owner-paid utilities, maintenance reserve and vacancy allowance (placeholder figures - substitute your own quotes)	-$300
Remaining before tax	$544

Two cautions apply to that arithmetic. First, the $544 is before tax, and rental income is taxable. The Canada Revenue Agency requires rental income to be reported, allows reasonable expenses incurred to earn it to be deducted, and expects shared costs on a home that is partly rented to be split between the personal and rental portions on a reasonable basis, such as floor area. Mortgage interest on the rental portion is an expense of earning the rent; mortgage principal is not. Keep the invoices, the lease and your allocation method from the first month. Second, part of each payment is principal, which builds equity in a property that now contains a second legal unit. That is real value, but it is not cash, and it does not pay a contractor invoice in month three. Judge the project on cash flow first and on equity second. Our investment property math guide goes deeper on separating the two.

There is also a version of this project where the rent line is zero by design. CMHC's occupancy rule lets a close relative occupy a unit rent-free, and the Finance parameters require the borrower or a close relative to occupy one of the current units. A suite built for a parent, or for an adult child, produces no rental income and still has to carry its payment. That can be the right family decision. It should be made with the $756-a-month figure on the table, not discovered after the mortgage closes. Where the occupant is a senior or an adult with a disability and the relationship qualifies, the Multigenerational Home Renovation Tax Credit in the table above can return up to $7,500 of the cost at tax time.

Five files that fail, and why

Most failed suite financing fails on eligibility or sequence, not on effort. These are the patterns to check your own file against before you spend on drawings.

1. The build started first. Construction is finished, or well advanced, before the insurer is approached. CMHC's approval-timing rule is the problem, and it cannot be fixed with a better rate elsewhere in the same product.
2. The property is a pure rental. No unit is occupied by the borrower or a qualifying close relative. The occupancy rule is a federal parameter, not a lender preference.
3. The value clears the ceiling. The as-improved value reaches $2 million. Detached homes in the most expensive Toronto and Vancouver neighbourhoods can cross this line on the existing house alone, before any suite value is added.
4. The plan needs the surplus. The budget only works if the loan exceeds the project cost and the extra cash covers other debts or purchases. The program forbids equity take-out, in those words.
5. The rental plan is short-term. The income projection assumes nightly or monthly tourist stays. Rentals under 90 consecutive days are outside CMHC's terms, and many municipalities restrict them separately in any case.

A file that fails one of these five is not necessarily a dead project. It is a project for the conventional routes in the comparison table, priced with their caps in view, or a project that waits until the occupancy, value or sequencing facts change.

Questions to take to a lender

Ask these in this order, and get the answers in writing before a construction contract is signed.

• Is this application going in as the secondary suite insured refinance, with which insurer, and what is the approval timeline?
• What as-improved value will the file use, who orders the appraisal, and what happens to my approval if the appraisal comes in lower than the estimate?
• What is my insurance premium in dollars, and what provincial tax applies to it at closing?
• What is the exact prepayment charge on my existing mortgage if I refinance now, under my contract's penalty method?
• How are construction advances released, what inspections trigger each advance, and what holdbacks apply?
• Which project costs count toward the financing cap, and how do I document an overrun if the build costs more than the approved budget?
• What are my debt-service ratios on this file at the qualifying rate, and how much room is left under the 39% and 44% limits?

A lender who cannot answer the first question by naming the product is telling you the file is being run as an ordinary refinance, where the 80% cap and today's value will quietly decide the outcome.

Frequently asked questions

Can I still apply for the $80,000 Canada Secondary Suite Loan?

No. The program was announced at $40,000 in Budget 2024, doubled to $80,000 at 2% over 15 years in December 2024 with a launch promised for early 2025, but no application process ever opened and no loans were advanced. Budget 2025 reporting records it as discontinued. The financing that exists is the insured refinance covered in this guide, applied for through a lender.

How much can I borrow to build a secondary suite in Canada?

Under the insured refinance, up to 90% of your home's as-improved value, with two brakes: the property's as-improved value must be under $2 million, and the additional financing cannot exceed the project costs. A conventional refinance remains capped at 80% of the home's current value, and a standalone HELOC is capped at 65% of value with combined secured borrowing capped at 80%.

What does as-improved value mean?

It is the appraised value of the property as if the secondary suite were already finished. That figure, rather than today's value, is what the 90% loan-to-value limit is calculated against in this program. The appraisal is ordered as part of the application, which is one reason approval has to come before construction.

Do I have to live in the home to use the insured suite refinance?

One of the current units must be occupied by you or by a close relative, on the terms the insurer sets. CMHC describes the qualifying relative as a person related by marriage, common-law partnership or a legal parent-child relationship, occupying on a rent-free basis. A property where every unit is rented to arm's length tenants does not qualify.

Can I rent the new suite on a short-term rental platform?

Not under this financing. CMHC's terms say the suite must not be rented for any period of less than 90 consecutive days. Municipal short-term rental rules apply on top of that, and many cities restrict such rentals to a principal residence or ban them in secondary suites outright. Check both layers before a short-term plan goes into a budget.

Can I use the refinance money for other debts as well?

No. The Department of Finance parameters cap the additional financing at the project costs, and CMHC states that the additional financing must only be used to facilitate construction and completion of the project, with equity take-out not permitted. Consolidating other debt inside this product is outside its terms.

What if my home will be worth more than $2 million after the suite?

The insured refinance is closed to that file, because the as-improved value must be less than $2 million. The remaining routes are a conventional refinance to 80% of current value, a HELOC inside its limits, a second mortgage, or savings. On a high-value property the project usually has to shrink to fit those caps, or wait.

Does rental income from a suite get taxed in Canada?

Yes. Rental income must be reported to the Canada Revenue Agency, and reasonable expenses incurred to earn it can be deducted. Where only part of a home is rented, shared costs are split between personal and rental use on a reasonable basis such as floor area. Only the interest portion of a mortgage payment is a rental expense, not the principal. This guide is education only; a suite changes your tax position, including on a future sale, so get advice on your own facts before the first tenant moves in.

Sources

Program parameters, definitions and status in this guide were taken from the sources below, read in October 2026. Your lender's and insurer's current terms govern your file.

• Department of Finance Canada, Mortgage Insurance Rule Changes to Enable Homeowners to Add Secondary Suites (October 8, 2024), the parameter list for the insured refinance: https://www.canada.ca/en/department-finance/news/2024/10/mortgage-insurance-rule-changes-to-enable-homeowners-to-add-secondary-suites.html
• Department of Finance Canada, announcement of the secondary suite measures, including the $2 million limit and the January 15, 2025 start for refinancing: https://www.canada.ca/en/department-finance/news/2024/10/deputy-prime-minister-announces-new-actions-to-build-secondary-suites-and-unlock-vacant-lands-to-build-more-homes.html
• CMHC, Refinance for Building Secondary Suites, borrower qualifications, the 90-day short-term rental line and the approval-before-construction requirement: https://www.cmhc-schl.gc.ca/professionals/project-funding-and-mortgage-financing/mortgage-loan-insurance/mortgage-loan-insurance-homeownership-programs/refinance
• Investment Executive, federal announcement doubling the planned Secondary Suite Loan to $80,000 at 2% over 15 years, December 2024: https://www.investmentexecutive.com/news/feds-double-amount-under-loan-program-for-secondary-suites/
• Nesto, status review of the Canada Secondary Suite Loan Program, reporting that it never opened and was discontinued in Budget 2025, and describing the insured refinance that replaced it in practice: https://www.nesto.ca/home-buying/canada-secondary-suite-loan-program-csslp/
• Canada Revenue Agency, Tax Tips 2023, including the Multigenerational Home Renovation Tax Credit of 15% of up to $50,000 of eligible expenses, to a maximum of $7,500: https://www.canada.ca/en/revenue-agency/news/newsroom/tax-tips/tax-tips-2023/own-home-wondering-tax-incentives-help.html

Program rules and insurer terms change. Confirm the parameters on the Finance and CMHC pages above before relying on any figure in this guide.