CMHC Secondary Suite Refinance for an Ontario Garden Suite
The $80,000 federal suite loan at 2% you read about never opened, and Budget 2025 confirmed it is not coming back. What does exist is a CMHC-insured refinance that can lend up to 90% of what your property will be worth with the suite built. It is real money, but it comes with a 90-day rental rule, a $2 million value cap and a lot of paperwork.
At a glance
CMHC insures the loan; your bank or broker actually lends it. Not every lender offers it, so ask by name.
Since January 15, 2025, CMHC will insure a refinance of up to 90% of your home’s as-improved value to build a secondary suite, including a garden suite, on an owner-occupied property of up to 4 units worth under $2 million, amortized up to 30 years. The money can only pay for the suite, and the suite cannot be rented for less than 90 days at a time.
The $80,000 Suite Loan Is Not Coming
Budget 2024 announced the Canada Secondary Suite Loan Program at up to $40,000, and in December 2024 Ottawa doubled it to $80,000 at 2% over 15 years to add a suite. Plenty of builder and real estate sites still tell you to apply for it. You can’t. No application ever opened.
In December 2024 the federal government doubled the loan to $80,000 and, in the same release, confirmed the insured refinance of up to 90% starting January 15, 2025 (Department of Finance, Fall Economic Statement release). Then Budget 2025, tabled November 4, 2025, confirmed the loan program would not go ahead. Mortgage industry coverage at the time, including nesto’s program status page, reported it as shelved because it overlapped with the refinance.
So if a contractor’s brochure promises “$80,000 at 2% from Ottawa,” that brochure is older than your last oil change. Ask what else in it is out of date.
Watch for this: some pages also mix up the federal program with local grants. Local money still exists in some places (for example the County of Simcoe Secondary Suites Program), but it has its own strings, usually affordable long-term rent. See our 2026 garden suite grants directory for what is open by town.
What CMHC Will Insure and What It Won’t
These are CMHC’s published terms. Your lender can be stricter than CMHC, never looser.
| Term | CMHC rule | What it means on a garden suite job |
|---|---|---|
| Loan-to-value | Up to 90% of the as-improved value | The appraiser values the property as if the suite were finished. A normal refinance stops at 80% of today’s value. |
| Value cap | Lending value or as-improved value must be below $2,000,000 | A big lot in Oakville or a waterfront place on the Bay can price you out. Under $2M after the suite, not before. |
| Units | Up to 4 units, including existing units | House plus garden suite is 2. House, basement unit and garden suite is 3. Fine. |
| Occupancy | Borrower or a close relative must live in the home | Not for an investment property where nobody in the family lives on site. |
| Use of funds | Equity take-out is not permitted | The new money pays for the suite. Not the boat, not the credit card. |
| Rental | No rental for any period of less than 90 consecutive days | No Airbnb. No 30-day “travel nurse” stays either. See below. |
| Timing | CMHC approval before construction starts, or at least at an early stage | If your foundation is already poured, expect a harder conversation. |
| Advances | Full service: CMHC validates up to 4 consecutive advances at no cost. Basic service: lender validates | You get paid in draws as work is done. Your builder needs to live with a draw schedule. |
| Amortization | Maximum 30 years | Past 25 years adds a 0.20% premium surcharge. |
| Qualifying | GDS 39%, TDS 44%, at the greater of contract rate + 2% or 5.25%; one borrower or guarantor with a 600+ credit score | The stress test applies to the whole new loan, not just the suite part. |
| Suite | Self-contained, complies with applicable by-laws and regulations; year-round access | Permit, final inspection and legal zoning matter. A bunkie with a hot plate is not a suite. |
Last checked October 2026 · Source: CMHC Refinance and CMHC Refinance fact sheet
Two Worked Examples with Round Numbers
Illustrations only. Your appraiser sets the value and your lender calculates the real premium.
Example A: lots of equity
- House worth $850,000 today, mortgage owing $380,000
- Garden suite all-in budget $320,000 (including servicing)
- Appraiser’s as-improved value: $1,080,000
- CMHC ceiling: 90% x $1,080,000 = $972,000
- But no equity take-out, so new loan = $380,000 + $320,000 = $700,000
- That is about 65% LTV, the lowest premium band (0.60%): roughly $4,200, or about $5,600 if you stretch past 25 years
Honest take: at 65% you might not need CMHC at all. A plain 80% refinance or a construction loan may cost less. Price both.
Example B: where the 90% earns its keep
- House worth $700,000 today, mortgage owing $520,000
- Garden suite budget $300,000
- Appraiser’s as-improved value: $930,000
- New loan = $520,000 + $300,000 = $820,000, about 88% LTV
- A normal 80% refinance on today’s value tops out at $560,000. You’d be $260,000 short.
- CMHC’s top band is 3.10% on the total loan, or a higher rate on just the increase, whichever is less. Budget five figures for the premium. It can be added to the mortgage.
This is who the program was built for: real equity, not quite enough of it.
The appraisal is the whole game. If the appraiser says the suite adds $150,000 of value but it costs $300,000 to build, the 90% math shrinks fast. Rural lots on well and septic often appraise with fewer comparable sales, so expect a cautious number. Read our garden suite resale value guide before you trust a realtor’s guess.
Last checked October 2026 · Source: CMHC Refinance premiums and surcharges
The 90-Day Rule Kills the Airbnb Plan
CMHC says the suite cannot be rented for any period of less than 90 consecutive days. Most town by-laws define a short-term rental as under 28 or 30 days. CMHC’s line is three times further out.
That means the furnished 30-day or 60-day rental to contractors, nurses or snowbirds is also off the table while the insured loan is on the property. Plenty of people plan on “medium-term” rentals to dodge city Airbnb rules. Under CMHC’s terms, that plan is dead too.
Renting to Mom, or to a long-term tenant on a 12-month lease, is exactly what the program wants. If short-term income is your business plan, read our garden suite Airbnb rules page first and finance it some other way.
What the Bank Will Ask For Before a Dollar Moves
Lenders were slow to roll this product out in 2025 and some front-line staff still don’t know it. Go in with the file already built.
Proof the suite is allowed
Zoning confirmation from your town that a detached unit is permitted on your lot. On a rural lot this might be a permanent additional residential unit or a temporary use by-law. Ask your lender early whether it will lend on a temporary garden suite; a 20-year by-law with a removal agreement is a different thing from a permanent unit.
Drawings and a permit (or permit application)
Floor plan, elevations and a site plan. The appraiser needs them to value an as-improved property that doesn’t exist yet. Many lenders want the building permit issued before the first draw.
A real budget, not a napkin
A fixed-price or line-item contract including servicing: water, sewer or septic, hydro trenching, driveway. Servicing is the part that blows budgets. Our servicing cost guide shows why.
Builder details and a draw schedule
Most lenders release money in stages after inspection: foundation, framing, lock-up, final. Up to 4 advances can be validated by CMHC at no cost under full service. Your builder needs enough cash to carry each stage.
Income documents and the stress test
You qualify at the higher of your contract rate plus 2% or 5.25%. Ask your lender how much expected suite rent it will count toward qualifying; lenders handle that differently.
Approval before you dig
CMHC wants approval before construction starts or at an early stage. Starting first and financing later is the most common way people lose this option.
Walk into the bank with the file already done
Our $399 + HST Garden Suite Feasibility Report confirms what your lot allows, sketches the suite and gives a realistic budget range, in 48 hours. That is most of what a lender asks for on the first visit.
Seven Rules of Thumb from the Job Site
- Ask for it by name. Say “CMHC-insured refinance to build a secondary suite.” If the person across the desk looks blank, ask for a mortgage specialist or try a broker.
- Get approval before the excavator shows up. CMHC is clear on this. A poured footing is not a pre-approval.
- Price the whole job, servicing included. If you run out of money at lock-up, the bank does not top you up because the septic bed cost more than you guessed.
- Don’t plan on short-term rental income. Under 90 consecutive days is not allowed. Plan the numbers on a 12-month lease or family use.
- Check the $2 million line after the suite. The cap is on the as-improved value. A $1.8M house plus a $300,000 suite is over.
- Compare against plain options. If your new loan lands under 80% of today’s value, a regular refinance or a construction loan may beat the CMHC premium. A HELOC is fine for small top-ups but the revolving part is capped lower.
- Rural lots need extra proof. Lenders and appraisers want to see that the well can supply two homes and that the septic is sized for both. More on that below.
Rural Lots: Well, Septic and Year-Round Access
Most of our own work is on rural lots in Simcoe County, on a well and a septic. The CMHC terms don’t exclude these, but the property must be suitable for full-time, year-round occupancy with year-round access. A seasonal road or a cottage that sits on blocks in February will not pass.
The bigger issue is the septic. A garden suite adds a whole dwelling unit to the sewage flow, and the Building Code sizes systems unit by unit. Often the existing bed can’t take it and you need an upgrade or a second system, which is a cost the appraiser will not add back dollar for dollar. Get the septic answer before you book the bank appointment. SepticReplacement.ca handles septic design and capacity checks for rural lots, and our rural and septic hub explains the basics.
If your township only allows a temporary garden suite under a Planning Act temporary use by-law, read our temporary garden suite guide and ask your lender directly how it treats a unit with a removal agreement on title.
Regular refinance
Up to 80% of today’s value. No CMHC premium. Works when you have plenty of equity.
Construction loan or draw mortgage
Lender pays in stages as work is inspected. Rates and fees vary. Common for bigger builds.
Local grants
Some towns and counties offer forgivable loans for affordable rentals. They can sit alongside financing. Check our grants directory.
For a broader look at loans, HELOCs and draws, see garden suite financing in Ontario. We are builders, not mortgage brokers; we don’t quote rates or pre-approve anyone.
Know your lot and your budget before the bank does
The appraisal, the lender and CMHC all start from the same question: what can you legally build, and what will it really cost? We answer that in 48 hours for $399, credited toward permit plans or the build.
CMHC Suite Refinance Questions
Is the Canada Secondary Suite Loan Program still available?
No. The loan was announced in Budget 2024 at up to $40,000 and doubled to $80,000 at 2% over 15 years in December 2024, but it never opened for applications. The federal government relied on the CMHC-insured refinance instead, and Budget 2025 (November 4, 2025) confirmed the loan program would not go ahead. Any page still telling you to apply for it is out of date.
How much can I borrow with the CMHC secondary suite refinance?
Up to 90% of the property’s as-improved value, meaning what the appraiser says it will be worth with the suite finished. The as-improved or lending value must be under $2,000,000, and equity take-out is not allowed, so in practice the new loan is your existing mortgage plus the cost of the suite, up to that 90% ceiling.
Can I use the CMHC refinance to build a detached garden suite?
Yes. CMHC lists laneway homes and in-law suites as examples, and a detached garden suite qualifies if it is self-contained, complies with local by-laws and the property is owner-occupied with up to 4 units in total. It must be legal, so zoning approval and a building permit are part of the file.
Can I rent the suite on Airbnb if I use CMHC financing?
No. CMHC’s terms say the suite cannot be rented for any period of less than 90 consecutive days. That rules out Airbnb and also 30 to 60 day furnished rentals. Family use or a long-term lease is fine.
Do I have to live on the property?
Yes. The borrower must own the home and the borrower or a close relative must live in it. This is an owner-occupied product, not an investor product. If nobody in the family lives on site, look at other financing.
Can I apply after construction has started?
CMHC says insured financing must be approved before construction starts, or at least at an early stage. Once the suite is framed, many lenders will say no. Get approval first, then break ground.
What does the CMHC premium cost?
It depends on the loan-to-value. CMHC’s homeowner premiums start at 0.60% of the loan at 65% LTV or less and rise to 3.10% at the 85 to 90% band, with a separate rate on just the increase if that works out lower. Amortization past 25 years adds 0.20%. The premium can be added to the mortgage. Your lender calculates the exact figure.
Which banks offer the CMHC suite refinance?
CMHC insures the loan but approved lenders choose whether to offer it, and rollout in 2025 was uneven. Ask your current lender for a CMHC-insured refinance to build a secondary suite by name, and if they can’t help, a mortgage broker can shop it. We don’t refer or get paid by lenders.
Does a rural lot on well and septic qualify?
It can. The property must be suitable for year-round occupancy with year-round access. Expect the lender and appraiser to ask about water supply and septic capacity for two units. Get the septic question answered first, through a designer such as SepticReplacement.ca, because an upgrade can add a large cost to the budget.