How to Pay for a Secondary Suite in Canada

Two federal programs actually help pay for a secondary suite in Canada right now, and one widely advertised program doesn’t, because it was cancelled before it ever opened. The Multigenerational Home Renovation Tax Credit puts up to $7,500 back on your tax return after the work is done, and a CMHC-insured refinance lets you borrow against the suite’s added value to pay for the work itself. If you’ve already read our guides to garden suites, legal basement apartments, laneway houses or multiplexes and know roughly what you’re allowed to build, this guide covers what actually pays for it, alongside everything else a Toronto purchase or build involves in our complete Toronto real estate guide.

What the Multigenerational Home Renovation Tax Credit covers

The Multigenerational Home Renovation Tax Credit, introduced in the 2022 federal budget, is narrower than its name suggests. It doesn’t apply to a secondary suite built for just any purpose. The renovation has to create a self-contained secondary unit so a “qualifying individual” can live with a “qualifying relation”: the qualifying individual is someone 65 or older by the end of the renovation, or 18 or older and eligible for the Disability Tax Credit. A suite built purely as a rental, with no senior or disabled family member moving in, doesn’t qualify for this specific credit, even though it might qualify for the financing covered later in this guide.

The secondary unit itself has to be self-contained: its own private entrance, kitchen and bathroom, separate from the main part of the house. A renovation that adds a bedroom and nothing else doesn’t meet the bar. You claim the credit on line 45355 of your T1 return, for the tax year the renovation finished, and you can only make this specific claim once in your lifetime per qualifying individual.

How much it’s actually worth, and when you claim it

The credit is 15% of your eligible renovation expenses, up to $50,000 in expenses, for a maximum credit of $7,500. It’s a credit, not a rebate: you pay the renovation bills as they come in, keep your receipts, then claim the credit on the tax return covering the year the work was completed. Nothing arrives before then. Budget for the full renovation cost up front, and treat the $7,500 as money that comes back the following spring, not cash on hand during construction.

What happened to the Canada Secondary Suite Loan Program

You’ll see this program named across a lot of renovation and mortgage-broker sites, usually advertised as an $80,000 loan at a fixed 2% rate over 15 years. It was real, as a plan. Budget 2024 set it up as a $40,000 low-interest loan; the 2024 Fall Economic Statement doubled it to $80,000 and promised a launch in early 2025. CMHC never opened an application for it and never published a term sheet. Budget 2025 confirmed the program would not be made operational at all, citing overlap with a different program that had already launched weeks earlier. If a page tells you to apply for this loan today, that page hasn’t been updated since the program was cancelled.

The CMHC refinance that replaced it

What actually launched, on January 15, 2025, is a CMHC-insured mortgage refinance built specifically to fund a secondary suite. Instead of a flat loan amount, it lets you refinance your existing insured mortgage to access up to 90% of your home’s value after the suite is built, capped at $2 million, amortized over as long as 30 years. You or a close relative (a spouse, common-law partner, parent or child) has to live in the home, the property can hold up to four units including the new suite, and the suite has to be self-contained and can’t be rented out for stretches shorter than 90 days. CMHC approval has to happen before construction starts, so this is something to arrange with a mortgage lender before you hire a contractor, not after.

This is financing, not free money: it’s a larger mortgage, with the monthly payment that comes with it, based on what your home is projected to be worth once the suite exists. It works best as a way to access the suite’s own future value to pay for building it, rather than drawing on savings or an unsecured line of credit at a much higher rate.

Using the tax credit and the refinance together

Nothing in either program’s own terms stops you from using both on one project, because they’re not competing for the same dollar. The refinance supplies money during construction; the tax credit returns 15% of what you spent after construction, on expenses up to $50,000. If your suite is being built so a senior parent or a disabled adult child can move in, and you’re financing the build through the CMHC refinance, you can still claim the MHRTC on your next return for the portion of spending that qualifies. Keep your renovation receipts either way: the refinance lender wants proof the money went toward the suite, and the CRA wants proof of the eligible expenses when you file.

Other programs that can help

Ontario Renovates is a separate, narrower federal-provincial program, and it isn’t a general secondary-suite grant. It’s aimed at low-to-moderate-income seniors (60 and older) and people with disabilities, offering a one-time forgivable loan of up to $25,000 for essential home repairs and accessibility work, with the first $5,000 of an approved accessibility project paid as an outright grant. Creating or legalizing a secondary suite is one of the eligible uses, but household income and asset limits apply, and the program is administered regionally, so the exact limits depend on which Ontario municipality you’re in. For most homeowners building a secondary suite, the MHRTC and the CMHC refinance above are the two routes that actually apply; Ontario Renovates is worth checking only if your household genuinely fits its income and age or disability criteria.

Frequently asked questions

What is the Multigenerational Home Renovation Tax Credit?

It’s a federal tax credit, worth 15% of eligible renovation expenses up to $50,000 spent, for a maximum of $7,500, available when a renovation creates a self-contained secondary unit so a qualifying individual (someone 65 or older, or 18 or older and eligible for the Disability Tax Credit) can live with a qualifying relation. You claim it on line 45355 of your T1 return for the tax year the renovation finished, and only once per qualifying individual in their lifetime. It doesn’t apply to a suite built purely as a rental with no senior or disabled family member moving in.

Is the Canada Secondary Suite Loan Program still available?

No. It was announced in Budget 2024 and expanded to an $80,000 loan at 2% over 15 years in the 2024 Fall Economic Statement, with a promised early-2025 launch, but CMHC never opened an application process for it. Budget 2025 confirmed it would not be implemented, citing overlap with a different program that had already launched. Any site still advertising it as something you can apply for is working from outdated information. The federal financing that actually exists today is the CMHC-insured refinance covered below, which launched the same month the loan program was originally supposed to.

How do I actually finance building a secondary suite now?

The real federal route, live since January 15, 2025, is a CMHC-insured mortgage refinance built for this purpose: it lets you refinance your existing insured mortgage to access up to 90% of your home’s value after the suite is built, capped at $2 million and amortized up to 30 years. You or a close relative has to live in the home, the suite has to be self-contained, and CMHC approval is needed before construction starts. This replaced the cancelled loan program as the actual financing mechanism a homeowner can use today.

Can I use the tax credit and the refinance on the same project?

Yes, nothing in either program’s terms prevents it, because they do different jobs: the refinance provides money to pay for construction, and the tax credit returns 15% of qualifying expenses afterward, up to the $7,500 maximum, when you file your return for the year the work finished. Keep your renovation receipts throughout the project, since both the refinance lender and the CRA will want proof the spending matches what each program requires. A suite built so a senior parent or a disabled adult child can move in, and financed through the refinance, can still claim the tax credit afterward without conflict, because one is a mortgage product and the other is a tax credit administered entirely separately.

Does Ontario Renovates help pay for a secondary suite?

It can, but only for a specific household: low-to-moderate-income seniors aged 60 and older, or people with disabilities, who meet regional income and asset limits. It offers a one-time forgivable loan of up to $25,000, with the first $5,000 of an approved accessibility project paid as a grant, and creating or legalizing a secondary suite is an eligible use. It isn’t a general secondary-suite grant open to every homeowner, so check your municipality’s specific limits before counting on it. Those limits are set by each municipality or service manager rather than by one fixed provincial threshold, so the same household can qualify in one city and not in another.

What should I check before relying on any of these figures?

Confirm the current MHRTC rules directly with the CRA when you file, since the program allows only one lifetime claim per qualifying individual and the eligibility test is specific. For the CMHC refinance, talk to a mortgage lender before hiring a contractor, since CMHC approval has to happen before construction starts, not after. And treat any page describing an $80,000 federal secondary-suite loan as outdated, since that program was cancelled in Budget 2025 and never accepted a single application. Government programs like these get revised at every federal budget, so check CRA’s and CMHC’s own current pages again before you finalize a renovation budget around any of these numbers.