Canada has one federal financing route for building a secondary suite: a CMHC-insured refinance that lets an owner borrow against the value the suite will create. The other route, the Canada Secondary Suite Loan Program, was announced twice, never opened applications, and was confirmed dead in Budget 2025. If an owner you manage for is planning a basement suite, a laneway unit or a garden suite, the difference decides whether the project gets funded, because the surviving route carries conditions the cancelled one did not.
What happened to the $80,000 loan
The Canada Secondary Suite Loan Program was created in Budget 2024 with $409.6 million over four years, offering owners a low-interest loan of up to $40,000 to build a suite. The 2024 Fall Economic Statement doubled the limit to $80,000 at 2 per cent over a 15-year term and promised a launch in early 2025.
That launch never came. CMHC did not open an application process, and Budget 2025 confirmed the program would not proceed, as part of a broader effort to wind down programs that do not directly add housing supply or reach the people in greatest need. The reason given for dropping it was overlap with the insured mortgage changes that had gone live weeks earlier. Owners who spent 2025 waiting for a term sheet were waiting for a document that was never going to arrive.
What the CMHC refinance allows
Since January 15, 2025, an owner can refinance up to 90 per cent of a property's as-improved value to pay for suite construction. As-improved means the appraiser values the property as if the suite were already finished, so the borrowing capacity comes from work that has not been done yet. Amortization runs up to 30 years.
The program criteria also set a debt service ceiling of 39 per cent gross and 44 per cent total, and a minimum credit score of 600 for at least one borrower or guarantor. The suite has to be self-contained and compliant with the bylaws and regulations that apply where it sits, which means the municipal approval question gets answered before the financing question, not after.
Five conditions that rule people out
Most of the files that fail do so on eligibility rather than on the numbers. These are the conditions worth checking first.
- Someone has to live there. At least one unit must be occupied by the borrower, or by a person related to the borrower by marriage, common-law partnership or a legal parent-child relationship, on a rent-free basis. A pure investment property held at arm's length does not qualify.
- The money is for construction only. Equity take-out is not permitted, so the refinance cannot quietly fund a down payment on the next acquisition.
- The as-improved value has to stay under $2 million. In parts of Vancouver and Toronto, a detached home with a new suite appraised as finished clears that line on its own.
- Four units is the ceiling. That count includes the units already on the property, not the new one alone.
- The suite cannot be a short-term rental. CMHC requires that it not be rented for any period shorter than 90 consecutive days. A nightly or weekly rental plan disqualifies the file, and the restriction does not expire when the renovation is finished.
The timing rule that decides the rest
Insured financing has to be approved by CMHC before construction starts, or at an early stage of it. This is the single rule most likely to cost an owner the money, because it inverts the order people work in by instinct. The usual sequence is to price the job, find the cash, build the suite, then refinance once there is a rentable unit and a real appraisal to point at. Under this program that sequence disqualifies you. The approval has to be in hand before the first trade is booked.
The practical consequence for a manager is that suite conversations have to start months earlier than they feel like they need to. An owner who mentions a basement suite in March for a September tenant is already late if they have not spoken to a lender.
Provincial programs are not a backstop
British Columbia ran the closest provincial equivalent and it is no longer open. BC Housing stopped accepting applications to the Secondary Suite Incentive Program on March 31, 2025, though existing pre-approvals and SSIP mortgages are being honoured. It paid 50 per cent of construction costs to a maximum of $40,000, registered as a forgivable loan cleared at 20 per cent a year over five years, on the condition that the home stayed the owner's principal residence and the suite was rented at or below BC Housing's rent affordability limits to someone who was not an immediate family member.
Nothing has replaced it. Municipal grants and development charge waivers for suites do exist in some places and change often, so treat your own city as a question to ask rather than an assumption to carry.
What to confirm before an owner draws plans
- Establish who will occupy the property. If nobody in the rent-free occupancy category is going to live in a unit, stop here and price a conventional renovation loan instead.
- Get a rough as-improved value before design work begins, so the $2 million ceiling is a known quantity rather than a surprise at the appraisal.
- Take the question to a lender, not to CMHC. The program runs through approved lenders, and the criteria a given lender layers on top of the insurer's rules are the ones that will decide the file.
- Confirm with the municipality that the proposed suite is permitted and can be built self-contained to code. A suite that cannot be legal cannot be financed this way.
- Put the 90 day minimum tenancy into the plan in writing, especially if the owner has ever mentioned nightly rentals.
- Hold off on booking trades until the insured financing approval exists on paper.
The headline number that got the attention, $80,000 at 2 per cent, was never available to anyone. The route that survived is larger and cheaper for owners who fit it, and closed entirely to owners who do not. Sorting your clients into those two groups is a twenty minute exercise, and it is worth doing before someone spends a spring waiting for financing that was never going to come.