Secondary suite financing options compared
| Option | How much | Main conditions | Best for |
|---|---|---|---|
| CMHC-insured refinance | Up to 90% of as-improved value (under $2M) | Owner or relative lives on site, funds for the suite only, 90+ day rentals | Larger projects, owners with limited cash |
| Kingston Detached ARU Incentive | Lesser of 50% of cost or $40,000 | Five years of capped rent to an eligible tenant, second mortgage, waitlisted | Long-term rentals inside Kingston |
| Kingston Interior ARU Incentive | Lesser of 50% of cost or $30,000 | Same as above | Basement and interior suites |
| Home equity line of credit | Depends on your equity and lender | Lender approval, variable rate | Flexible draws during construction |
| Savings or cash | What you have | None | Smaller conversions |
What happened to the Canada Secondary Suite Loan Program?
The federal government announced the Canada Secondary Suite Loan Program in Budget 2024 and raised it to $80,000 at 2% in the 2024 Fall Economic Statement. It was never made operational, and the government later confirmed it would not go ahead. No one can apply for it.
If a website or salesperson tells you to apply for the federal secondary suite loan, treat it as out of date. The original 2024 federal announcement is still online, which causes a lot of the confusion.
How does CMHC refinancing for secondary suites work?
Since January 2025, CMHC insures refinanced mortgages used to add secondary suites. You can borrow up to 90% of the home's value after the suite is finished, on homes valued under $2 million with up to four units, amortized up to 30 years. The money must go only to building the suite.
- You must already own the home, and you or a parent, child or spouse must live in one unit rent free.
- The suite must be self-contained, meet local bylaws, and not be rented for less than 90 consecutive days.
- At least one borrower needs a credit score of 600 or more, and the loan must pass standard debt ratio tests.
- CMHC must approve the financing before construction starts, or at a very early stage.
Terms are from the CMHC refinance for secondary suites page. Your lender or mortgage broker applies on your behalf.
Kingston ARU forgivable loans
Inside the City of Kingston, the ARU incentive can cover up to $40,000 of a detached unit or $30,000 of an interior unit, forgiven over five years of affordable rent. It is currently waitlisted and tied to a building permit issued by December 1, 2026. Full details are in our Kingston ARU incentive program guide.
How to plan the money side of your project
- Get a real quote first. Lenders and the City want a cost estimate. Our design and permit service gives you an itemized one.
- Talk to your lender before you sign anything. Ask how a refinance or a second mortgage from the City would work with your current mortgage.
- Line up approvals before construction. Both CMHC refinancing and the City incentive need to be in place early, not after the work is done.
- Plan for rent. Decide whether you will rent at market rates or at the City cap, since it changes which programs make sense.
We are builders, not financial advisors. Confirm current terms with CMHC, the City and your lender before you rely on them.
Next, compare garden suites and basement apartments to see which unit fits your budget.
Frequently asked questions
Is the Canada Secondary Suite Loan Program still available?
No. The federal Canada Secondary Suite Loan Program, announced in 2024 as a low-interest loan of up to $80,000, never opened to applications and was later cancelled. The main federal option now is CMHC-insured refinancing for secondary suites.
How much can I borrow to build a secondary suite with CMHC refinancing?
CMHC refinancing lets you borrow up to 90% of the home value after the suite is built, as long as that value is under $2 million and the home has up to four units. The money must go only to building the suite, and you or a close relative must live in one of the units.
Can I use the Kingston ARU incentive and a CMHC refinance together?
They are separate programs, so many owners look at both. The Kingston loan is secured by a second mortgage, so your first mortgage lender needs to be comfortable with that. Ask your lender or mortgage broker before you apply for either.
What is the cheapest way to finance a basement apartment?
For many owners it is a mix of savings, a home equity line of credit and the Kingston interior ARU incentive if they plan to rent affordably. A CMHC refinance can help when the project is larger. A mortgage professional can compare the real costs for your situation.