CMHC Secondary Suite Loan: How Ontario Homeowners Can Get $80,000 (2026)
Canada is in a housing crisis, and governments at every level are trying to unlock new supply. One of the most direct programs available to individual homeowners is the **CMHC Secondary Suite Loan Program**, which was doubled from $40,000 to $80,000 in late 2024.
If you own a home in Ontario and have the space to add a secondary suite — a basement apartment, garden suite, or laneway house — this program can provide up to $80,000 in low-interest financing to help make it happen.
What Is the CMHC Secondary Suite Loan?
The Secondary Suite Loan Program is a federal initiative administered by Canada Mortgage and Housing Corporation (CMHC). It provides homeowners with low-interest loans specifically for building new secondary suites on their property.
Key Program Details
| Feature | Details |
|---|---|
| **Maximum Loan** | $80,000 per property |
| **Interest Rate** | Low fixed rate (below market) |
| **Eligible Suite Types** | Basement apartments, garden suites, laneway houses, above-garage units |
| **Requirement** | Suite must be a self-contained dwelling with kitchen, bathroom, and separate entrance |
| **Rental Condition** | Some programs require renting at below-market rates for a specified period |
| **Administered By** | CMHC through participating lenders |
Ontario-Specific Programs (Stack With CMHC)
Ontario homeowners can potentially combine the federal CMHC loan with provincial and municipal programs for even greater savings.
Ontario Secondary Suite Incentive Program
Ontario offers up to **$40,000 in forgivable loans** to cover 50% of construction costs for new secondary suites. The loan is forgiven if you maintain the suite as a rental for a minimum period at agreed-upon rates.
Ontario Renovates Program
Through local housing authorities, Ontario Renovates provides up to **$25,000 in forgivable loans** per secondary suite. The loan is interest-free and forgiven after 15 years, provided:
Municipal Programs
Some Ontario municipalities offer additional incentives:
| Municipality | Program | Amount |
|---|---|---|
| Hamilton | ADU Housing Incentive | Up to $25,000 per unit |
| Toronto | Laneway/Garden Suite Grants | Varies by year |
| Waterloo Region | Ontario Renovates (local admin) | Up to $25,000 |
| Simcoe County | Housing programs through county | Varies |
Maximum Potential Funding Stack
| Program | Maximum |
|---|---|
| CMHC Secondary Suite Loan | $80,000 |
| Ontario Secondary Suite Incentive | $40,000 |
| Ontario Renovates | $25,000 |
| Municipal programs | $10,000-$25,000 |
| **Total potential** | **$155,000-$170,000** |
Note: Not all programs can be stacked in every situation. Check eligibility for each program individually and confirm stackability with your local housing authority.
What Types of Suites Qualify?
Basement Apartments (Most Common)
Converting an existing basement into a legal secondary suite. This is the most popular option in the GTA because the space already exists — you are primarily adding a kitchen, bathroom, separate entrance, fire separation, and bringing everything up to code.
**Typical cost in Ontario:** $80,000-$200,000 (depending on whether underpinning is needed)
Garden Suites (Backyard Homes)
A detached, self-contained dwelling built in your backyard. Ontario legalized garden suites province-wide in 2022 through Bill 23, making them available in all municipalities regardless of local zoning.
**Typical cost:** $150,000-$350,000 for a 500-800 sq ft unit
Laneway Houses
Similar to garden suites but built fronting a rear laneway. Most common in Toronto's older neighbourhoods where rear lanes exist.
**Typical cost:** $200,000-$400,000
Above-Garage Suites
Converting or building above an attached or detached garage. Requires structural assessment of the existing garage.
**Typical cost:** $100,000-$250,000
Eligibility Requirements
Property Requirements
Building Code Requirements
All secondary suites must meet the Ontario Building Code. Key requirements include:
| Requirement | Standard |
|---|---|
| Ceiling Height | Minimum 1.95m (6'5") in habitable rooms |
| Fire Separation | 45-minute rating (new construction) or 15-30 min (existing) |
| Egress Windows | Minimum 0.35 m² clear opening |
| Separate Entrance | Must not pass through main dwelling |
| Kitchen | Full kitchen with cooking, refrigeration, and sink |
| Bathroom | Full bathroom with toilet, sink, and shower/tub |
| Smoke/CO Alarms | Interconnected between units |
For a complete breakdown of requirements, see our [legal basement apartment guide](/services/basement-second-unit).
The Application Process
Step 1: Confirm Eligibility
Before investing time in applications:
Step 2: Get Professional Plans
You will need:
Step 3: Apply for Funding
Step 4: Build
Once funding is secured and permits are issued:
Step 5: Rent and Maintain Compliance
Return on Investment
A secondary suite can be one of the best investments an Ontario homeowner makes:
| Factor | Typical Values |
|---|---|
| Construction Cost (basement) | $80,000-$150,000 |
| Less: CMHC Loan | -$80,000 (low interest) |
| Less: Ontario Incentive | -$40,000 (forgivable) |
| Net Out-of-Pocket | $0-$30,000 |
| Monthly Rental Income | $1,500-$2,500 |
| Annual Rental Income | $18,000-$30,000 |
| Payback Period | 1-3 years (net cost) |
| Property Value Increase | 15-25% |
Even without government programs, a $100,000 basement apartment generating $2,000/month in rent pays for itself in about 4 years — while increasing your property value by $100,000-$200,000 or more.
Common Mistakes to Avoid
Frequently Asked Questions
Can I use the CMHC loan for a basement apartment?
Yes. Basement apartments are the most common type of secondary suite funded by the program, provided the suite will be fully self-contained with its own kitchen, bathroom, and entrance.
Do I have to rent the suite below market rate?
It depends on the specific program. The CMHC loan has specific rental requirements that may differ from provincial programs. Some Ontario programs require below-market rent for the forgiveness period. Check the terms of each program you apply to.
Can I use the suite for Airbnb/short-term rental?
Most government incentive programs require long-term rental (typically 12+ month leases). Using the suite for short-term rental may disqualify you from funding or forgiveness terms.
What if I sell the house before the forgiveness period ends?
If you sell before the forgiveness period, you will need to repay the outstanding balance of any forgivable loans. The CMHC loan balance would be part of your mortgage obligations at sale.
Can I build a garden suite if my municipality doesn't allow it?
Ontario's Bill 23 (More Homes Built Faster Act, 2022) requires all municipalities to permit garden suites. If your municipality has not updated its zoning bylaws, provincial legislation overrides local rules.
How long does the whole process take?
From initial planning to move-in ready, expect 6-12 months: 1-2 months for design and permits, 1-2 months for funding applications, and 3-6 months for construction.
Next Steps
[See Basement Apartment Costs by City](/costs/basement-second-unit) | [Find Rebates in Your City](/savings) | [Browse Verified Pros](/pros)
