Secondary Suite Financing in Ontario: How CMHC's Basement & Laneway Suite Program Works

Secondary suite financing in Ontario means borrowing money — usually through a refinance, HELOC, or CMHC-insured mortgage — to build or legalize a self-contained unit like a basement apartment, garden suite, or laneway house on a property you already own. Ontario homeowners are asking about this more often now that provincial zoning rules make it easier to add a suite without a rezoning fight, and lenders have more structured products for exactly this purpose.

This guide walks through how secondary suite financing actually works today in Ontario — including the CMHC-insured refinance program built specifically for this, what changed in Ontario zoning rules, and where a lot of outdated information online gets it wrong. lendsimpl works with Ontario homeowners on this question regularly, from a first phone call through to comparing lenders.

Quick answer: Yes, you can get a mortgage to build a basement or laneway suite in Ontario. The main financing route is CMHC's insured Secondary Suite Refinance Program, which lets an eligible homeowner refinance up to 90% of their home's value after the suite is built, provided the property is worth under $2 million and at least one unit stays owner-occupied. A HELOC, a standard refinance, or a private mortgage are the other common paths, especially for properties that don't fit CMHC's criteria. An earlier direct government loan for this purpose was announced in 2024 but was later discontinued — more on that below, since several websites still describe it as available.

Below: how Ontario's zoning rules changed, how the CMHC-insured refinance program works, other financing routes, a step-by-step qualification breakdown, the local Ontario picture, five mistakes to avoid, and the questions homeowners ask most before starting a secondary suite project.

Key Takeaways

• Most Ontario residential lots can now have up to three units as-of-right — a main home, one interior suite (like a basement apartment), and one detached suite (garden or laneway) — without a zoning bylaw amendment, under Ontario's Planning Act changes.
• CMHC's insured Secondary Suite Refinance Program allows up to 90% loan-to-value on the home's value after the suite is built, for properties valued under $2,000,000, with amortizations of up to 30 years.
• A separate, earlier program — a direct $40,000 to $80,000 government loan for secondary suites — was discontinued in the 2025 federal budget and never opened for applications; if you've read about it elsewhere as active, that information is outdated.
• Ontario municipalities, including Toronto, Ottawa, and cities across the GTA, still require a building permit and full compliance with the Ontario Building Code even when a suite is allowed as-of-right under zoning.
• Homeowners in Scarborough, Richmond Hill, North York, Pickering, Ajax, and Ottawa can work with an FSRA-licensed Ontario mortgage broker to compare CMHC-insured refinancing against a HELOC or private mortgage before starting construction.
• Rental income from a completed secondary suite can often be counted toward mortgage qualification, which can offset some of the financing cost — see how lenders calculate that in our companion guide on rental income qualification.

What Changed: Ontario Now Allows Up to 3 Units as-of-right

Secondary suite financing became a much more common question in Ontario after the province changed how many housing units a typical residential lot is allowed to have without a rezoning application.

Definition moment: As-of-right — the technical term for a use that's automatically permitted under current zoning, meaning a homeowner can apply directly for a building permit instead of going through a zoning bylaw amendment or a minor variance hearing first.

Under Ontario's Planning Act changes from the More Homes Built Faster Act, most urban residential lots connected to municipal water and sewer can now have up to three residential units as-of-right: the main home, one interior secondary suite such as a basement apartment, and one detached suite such as a garden suite or laneway house in the rear yard — though not both a garden suite and a laneway house on the same lot.

This zoning change doesn't remove the need for a building permit or Ontario Building Code compliance — it just removes the rezoning step that used to slow projects down or make them uncertain. Setback, height, lot coverage, and parking rules still vary by municipality, so a permit review is still required before construction starts.

Bottom line: Zoning approval and financing are two separate steps. As-of-right zoning makes it easier to get permission to build a suite; it doesn't pay for the construction. That's where secondary suite financing comes in.

How CMHC's Secondary Suite Refinance Program Works

CMHC's Secondary Suite Refinance Program means refinancing your existing mortgage with mortgage loan insurance from CMHC to access funds specifically for building a self-contained secondary suite, at a higher loan-to-value than a typical uninsured refinance allows.

In practical terms, the program lets an eligible homeowner refinance up to 90% of the property's value, calculated on an "as improved" basis — meaning the expected value after the suite is built — for properties valued under $2,000,000, with amortizations of up to 30 years, according to CMHC (2026).

1. The property must have at least one unit occupied by the homeowner or a related person living there rent-free — this program is built for owner-occupied properties, not pure rental investments.
2. The secondary suite must be self-contained and follow local zoning and building bylaws — an unfinished basement with a shared entrance generally won't qualify until it's built to code.
3. The property can have up to four units total once the suite is added, and it cannot be used as a short-term rental — CMHC requires it not be rented for periods shorter than 90 consecutive days.
4. Applicants need to be Canadian citizens, permanent residents, or non-permanent residents authorized to work in Canada, and lenders apply their own minimum credit score requirements on top of CMHC's guidelines.

Because this is an insured mortgage product, not every lender has rolled it out the same way — some Ontario lenders adopted it faster than others after its January 2025 launch, so comparing which lenders actually offer it (and how smoothly) is worth doing before you commit to a construction plan.

A Note on the Discontinued Secondary Suite Loan Program

The difference between the CMHC-insured refinance program above and an earlier program you may have read about comes down to one thing: only one of them is still active.

In 2024, the federal government announced a separate Canada Secondary Suite Loan Program — a direct, low-interest loan of up to $80,000 for homeowners building a secondary suite. That program was discontinued in the 2025 federal budget and never opened for public applications, in part because of overlap with the CMHC-insured refinance program described above. Several third-party websites and contractor blogs still describe the direct loan as available — it isn't, as of this writing.

For Ontario homeowners planning a project, the practical takeaway is simple: the CMHC-insured refinance route is the current government-backed path, not a separate cash loan. Confirming which program a lender, contractor, or website is actually referring to can save real time before you get attached to a budget that assumes a program no longer exists.

Bottom line: Always verify with a licensed mortgage broker or directly with CMHC before assuming a specific secondary suite program is still open — housing programs change, and outdated blog posts don't always get updated when they do.

Other Ways to Finance a Secondary Suite in Ontario

A standard HELOC is often better when a homeowner already has substantial equity and doesn't want to disturb their existing mortgage's rate or term to fund a smaller suite project.

A conventional refinance without CMHC insurance works when the property value is above CMHC's program cap, when the property won't be owner-occupied, or when a homeowner prefers to avoid mortgage insurance premiums, though it typically caps out at a lower loan-to-value than the insured program.

Our guide to HELOCs, refinancing, and second mortgages in Canada compares these routes side by side if you're not sure which fits your equity position.

A private mortgage can be a practical bridge option for a homeowner with lower credit, non-traditional income, or a property that doesn't fit a bank's standard criteria — approval and terms depend on income, equity, credit, property type, lender criteria, and documentation, and this route generally carries a higher cost than an insured or conventional mortgage.

What Lenders Look at for Secondary Suite Financing

Qualifying for secondary suite financing works much like qualifying for any refinance, with a few extra pieces tied specifically to the new unit.

1. Confirm your current equity position. Most lenders need to see meaningful existing equity before approving a refinance for construction — a broker can estimate this from your current mortgage balance and an updated property value.
2. Get a realistic construction budget and permit-ready plan. Lenders generally want to see that the suite is a genuine self-contained unit that will meet local zoning and building code requirements, not an informal renovation.
3. Confirm your income, credit, and existing debt. Approval depends on income, equity, credit, property type, lender criteria, and documentation — no lender can guarantee approval before reviewing your full file.
4. Decide whether you want the projected rental income counted toward qualification. Some lenders will factor in expected rent from the new suite once it's built and leased; others require the suite to be complete and rented first.
5. Compare lenders that actually offer the CMHC-insured secondary suite product. Not all lenders rolled this program out the same way, so a broker comparison can save a wasted application with a lender that doesn't support it yet.

What This Means for Ontario Homeowners

Secondary suite projects are picking up across the GTA and beyond as homeowners look for ways to add rental income or house family members without moving.

Homeowners in Scarborough, Richmond Hill, North York, Pickering, Ajax, and Ottawa are working through this exact process with lendsimpl — confirming what their municipality allows as-of-right, budgeting realistic construction costs, and comparing CMHC-insured refinancing against a HELOC. Municipal permit requirements, setback rules, and parking requirements still vary by city even though the province-wide as-of-right policy applies broadly, so checking with your local building department early avoids surprises.

Bottom line: Wherever you're building in Ontario, pairing the right municipal permit process with the right financing product matters as much as the construction itself. lendsimpl is a licensed Ontario mortgage brokerage (FSRA #13763) that works with homeowners across the province on exactly this.

5 Mistakes to Avoid When Financing a Secondary Suite

These mistakes show up often with secondary suite projects — all avoidable with the right information before you apply.

1. Assuming a discontinued program is still available. The direct $80,000 secondary suite loan is no longer open — confirm current programs with a broker or CMHC directly rather than an older article.
2. Starting construction before confirming financing. Lenders generally want to review your plan before funds are advanced — starting work first can create budget gaps if the financing doesn't line up as expected.
3. Skipping the permit process because zoning allows it as-of-right. As-of-right zoning still requires a building permit and Ontario Building Code compliance — an unpermitted suite can create problems at resale or refinance.
4. Not confirming whether projected rental income counts toward qualification. Policies vary by lender — some count it before the suite is finished, others require it to be built and leased first.
5. Comparing only your existing bank. Not every lender offers the CMHC-insured secondary suite product — a broker comparison across lenders can surface options your current bank doesn't.

Useful Resources for Ontario Homeowners Adding a Suite

See how rental income from a finished suite is actually counted toward qualification in our guide on how lenders count rental income toward your mortgage.

Compare investment property mortgage options in Canada if you're weighing a secondary suite against buying a separate rental property.

Review our HELOC, refinance, and second mortgage guide for a fuller comparison of financing structures.

Explore HELOC options in Ontario if you'd rather draw funds as construction progresses instead of refinancing all at once.

See our Ontario refinance overview for how a full refinance compares to a HELOC for larger projects.

Model your numbers with our free mortgage calculator before finalizing your construction budget.

Frequently Asked Questions — Secondary Suite Financing in Ontario

Can I get a mortgage to build a basement or laneway suite in Ontario?

Yes. The main route is CMHC's insured Secondary Suite Refinance Program, which allows an eligible homeowner to refinance up to 90% of the property's value after the suite is built, for properties under $2,000,000, with up to 30-year amortization. HELOCs, conventional refinances, and private mortgages are other options depending on your equity and the property's value.

Is the government's $80,000 secondary suite loan still available?

No. That direct loan program was announced in 2024 but was discontinued in the 2025 federal budget and never opened for public applications. Some websites still describe it as active — that information is outdated. The current active program is CMHC's insured refinance option, not a direct cash loan.

Does Ontario zoning still require a permit for a basement or laneway suite?

Yes. Ontario's Planning Act changes allow up to three units as-of-right on most residential lots without a rezoning application, but a building permit and full Ontario Building Code compliance are still required before construction. Setback, parking, and lot coverage rules can still vary by municipality.

Can rental income from the new suite help me qualify for the financing?

In many cases, yes — some lenders will count projected or actual rental income from a completed, self-contained suite toward your qualifying income, though policies vary on whether the suite needs to be finished and leased first. A licensed Ontario mortgage broker can confirm how a specific lender treats this before you apply.

What's the difference between the CMHC refinance program and a regular HELOC for a secondary suite?

The CMHC-insured program allows a higher loan-to-value — up to 90% — because it's insured, which can unlock more funds if your existing equity is limited. A HELOC generally caps lower but avoids restructuring your existing mortgage and can be more flexible for smaller, phased projects. Which one fits depends on your equity, timeline, and whether you want to touch your current mortgage rate.

Should I work with a mortgage broker for secondary suite financing?

It's worth it, since not every lender has rolled out the CMHC-insured secondary suite product the same way, and approval always depends on income, equity, credit, property type, lender criteria, and documentation. A licensed Ontario mortgage broker can compare 30+ lenders' secondary suite options. lendsimpl is FSRA-licensed brokerage #13763.

Disclaimer

This article is for general educational purposes only and should not be taken as financial, legal, or mortgage advice. Mortgage options, rates, approvals, and lender requirements can vary based on borrower profile, property details, credit history, income, equity, documentation, and current market conditions. Speak with a licensed mortgage professional before making a mortgage decision. lendsimpl is a licensed mortgage brokerage in Ontario (FSRA #13763).