CMHC Secondary Suite Refinance: Borrow Up to 90% to Build a Rental Suite (2026 Guide)

What Is the CMHC Secondary Suite Refinance?

Normally, a refinance in Canada is capped at 80% of your home's value and cannot be insured. Since January 15, 2025, CMHC has made an exception: homeowners who are adding a self-contained secondary suite (a basement apartment, a garden suite, or a laneway house) can refinance up to 90% of the property's value once the suite is built, with CMHC insurance.

It is designed to add rental housing, so the extra money can only go toward building the suite.

The Key Rules at a Glance

These are the program parameters as published by CMHC:

How Much Can You Borrow? A Worked Example

Lenders can use the as-is value plus the cost of the improvements as the as-improved value.

Example (illustrative): your home is worth $800,000 today with a $620,000 mortgage. A basement suite will cost $180,000 to build.

• As-improved value: $800,000 + $180,000 = $980,000 • New mortgage: $620,000 + $180,000 = $800,000 • Loan-to-value: $800,000 ÷ $980,000 = 81.6%

A regular refinance could not do this, because it would be above the 80% cap. Under the CMHC program it fits, and the maximum would be 90% of $980,000, or $882,000, as long as the extra money is spent on the suite.

What Does the CMHC Insurance Cost?

The premium depends on the loan-to-value. CMHC publishes two columns: a premium on the total loan and a premium on the increase in loan amount for a refinance. Your lender determines which applies to your file.

Does the Future Rent Help You Qualify?

Yes, lenders can count rental income from the new suite, although each lender uses its own method (a rental offset against housing costs, or adding a portion of the rent to your income). This is often what makes the numbers work: the suite's rent offsets much of the higher mortgage payment in the GDS and TDS calculation.

Because each lender treats rental income differently, the same file can pass at one lender and fail at another. That is a good reason to have a broker compare lenders before committing to a contractor.

How the Money Is Advanced During Construction

You do not get the full amount on day one. The financing has to be approved before construction starts, or at an early stage, and the money is released in draws as work is completed, with inspections along the way. Under CMHC's full-service option, CMHC validates up to 4 advances.

Plan for this in your contractor agreement: most builders want deposits up front, so you may need a small amount of your own cash or a short-term facility to bridge the first stage.

What Disqualifies You?

• Planning to rent the suite on Airbnb or any lease shorter than 90 consecutive days • Wanting cash out for anything other than building the suite • A property worth $2 million or more once improved • Not living in one of the units yourself (or a family member living there rent-free) • A suite that is not self-contained or does not meet local bylaws and building code • Starting construction before the financing is approved

Is This Different From the Canada Secondary Suite Loan Program?

Yes. The Canada Secondary Suite Loan Program, a separate low-interest government loan announced in Budget 2024, was cancelled in the fall 2025 federal budget. The CMHC Refinance for secondary suites is an insured mortgage product offered through regular lenders, and it remains available.