If you are counting on the Canada Secondary Suite Loan Program to pay for a backyard home, here is the short answer: the federal loan was announced but never opened, and no bank or CMHC office takes applications for it. As a garden suite builder in Toronto, we would rather you plan around money that exists. The measure that did launch, an insured CMHC refinance, usually reaches further than the old loan would have, as long as your home and your plans meet its rules.
The refinance is now one of several financing options for a Toronto garden suite, next to a home equity line of credit (HELOC) and a construction loan. The table below compares the announced secondary suite loan program with the routes you can actually use in 2026.
| Option | Open in 2026? | How much you can borrow | Repayment | Best fit |
|---|---|---|---|---|
| Canada Secondary Suite Loan Program | No, never launched | $80,000 at 2% (announced) | 15 years (announced) | Nobody, until Ottawa funds it |
| CMHC secondary suite refinance | Yes, since January 15, 2025 | Up to 90% of the home’s value after the suite is built, on homes under $2 million | Up to 30 years | Owners who need to borrow past 80% of their home’s value |
| Conventional refinance | Yes | Up to 80% of the home’s value | Usually 25 to 30 years | Owners with solid equity who want to avoid an insurance premium |
| HELOC | Yes | Revolving portion capped at 65% of the home’s value | Interest-only payments allowed | Smaller budgets and owners who want to draw money as bills arrive |
| Construction loan | Yes | Set by the lender against the project | Converted to a mortgage after completion | Owners with less equity who need funds released in stages |
What happened to the Canada Secondary Suite Loan Program
The idea first appeared in Budget 2024 as a $40,000 loan. In the December 2024 Fall Economic Statement, Finance Canada doubled the amount, set the rate and term, gave CMHC $409.6 million over four years to run it and promised a launch in early 2025. That launch never came. CMHC never published an application page, lenders never received a product to sell, and the federal budget tabled in November 2025 left the loan out entirely.
Several Canadian mortgage publishers now describe the program as cancelled. We could not find a formal cancellation notice from Ottawa, so the precise wording is “announced, funded on paper, never opened.” For a homeowner the result is the same: there is no 2% secondary suite loan program to apply for today. If a contractor or website still tells you to budget around it, ask them for the CMHC link.
Garden suite loan through CMHC refinancing: who qualifies
The refinance was announced in the same package and did launch on schedule. You take a new mortgage from your own bank or broker, and CMHC insures it. The lender looks at what your home will be worth with the suite finished, not what it is worth today, which is what lets the numbers work for a new building in the backyard.
CMHC’s examples name basement apartments and laneway homes. A garden suite falls under the same test because it is a self-contained unit, but confirm with your lender before you sign a construction contract. The main conditions are:
- The suite must be self-contained and comply with local bylaws, which in Toronto means a building permit.
- You, or a relative living there rent-free, must occupy one of the units.
- The property can have no more than four units once the suite is built.
- The money can only pay for the project. Taking extra equity out for other uses is not allowed.
- Neither unit can be rented for less than 90 consecutive days, so short-term rental is out.
The $2 million value cap is the rule that catches many Toronto owners. A detached house in a lot of central neighbourhoods is already above it before any suite is added, and those owners are back to a conventional refinance or a HELOC. On the plus side, CMHC will validate up to four progress advances at no cost under its full-service option, so funds can follow the foundation, framing and finishing stages of the build.
Secondary suite loan program in Ontario and Toronto: grants and fee relief
Homeowners often search for a secondary suite loan program in Ontario or a garden suite grant at the provincial level, hoping for a local version of the federal loan. As of October 2026 there is no Ontario-wide grant or loan for garden suites.
Toronto does not offer a cash grant either. The savings come through fees instead. A typical garden suite added as the second unit on a lot pays no municipal development charges, although the school board’s education development charge still applies. If you rent the suite long term, you may also qualify for an HST rebate on the new rental unit. Our breakdown of a realistic garden suite budget covers those fees and the rebate rules line by line.
How to apply for a garden suite loan, with a worked example
Lenders want to see a defined project before they approve anything. Start by confirming that your lot can take a suite and choosing a design. Using pre-approved garden suite plans can shorten the approval stage. Next, get drawings and a fixed-price construction quote, then ask your lender or broker for an appraisal on an “as-improved” basis. Agree on a draw schedule that matches the construction stages before you sign with a builder.
Here is a simplified example. Our smallest model, The Nest, is a 256 sq. ft. suite with a starting price of $99,000. Assume a homeowner in East York whose house is worth $1,250,000 today, with $600,000 left on the mortgage. After site work, servicing and permit fees, assume the all-in budget comes to $180,000, and the appraiser values the finished property at $1,350,000.
The new mortgage would be $780,000, about 58% of the as-improved value. That is well under 80%, so a conventional refinance does the job without a CMHC premium, and the cancelled $80,000 loan would have covered less than half of the budget anyway. Now change one number: the same owner still owes $1,000,000. The new mortgage becomes $1,180,000, about 87% of the as-improved value. No conventional lender will go that high, but the CMHC refinance allows up to $1,215,000 on that property, so the project still gets funded. The trade-off is an insurance premium added to the loan, which rises with the loan-to-value ratio, so ask your lender for the exact figure.
The Canada Secondary Suite Loan Program made a good headline, but it would only have paid for part of a garden suite, and it never opened. Your real choice in 2026 is between the CMHC refinance, a conventional refinance, a HELOC or a construction loan, and that choice depends on two figures: your mortgage balance and what your home will be worth once the suite is finished. If you want help working those out with a design and price in hand, book a free consultation with our team before you speak to a lender.