Federal Government Fall Economic Statement – Adding Secondary Suites to Single-Family Homes

Even in Canada’s biggest, densest cities, decades of restrictive zoning by municipal governments have built communities primarily comprised of single-family homes. Many homeowners, such as retirees, no longer use all of the space that comes with a single-family home. Yet, they continue to pay the heating, cooling, insurance, and property taxes on that unused space.

Secondary suites offer an opportunity to bring much needed gentle density to our neighbourhoods, while lowering the cost of homeownership and making it easier for multi-generational families to live together.

By helping homeowners add secondary suites, such as rental apartments, in-law suites, and laneway homes, we can reduce costs for homeowners, such as by helping them pay off a mortgage with the income from a new rental apartment. Secondary suites can also bring families closer together. For example, a retired couple may wish to downsize into a new laneway home or in-law suite, so their children could raise their young family in the property’s existing home.

To build more housing in single-family neighbourhoods, starting January 15, 2025, new mortgage insurance reforms will help homeowners add secondary suites to their homes by leveraging their home’s equity.

  • Specifically, these reforms allow refinancing with insured mortgages for secondary suites, to let homeowners access the equity in their homes to finance the construction of secondary suites. Borrowers will be able to access financing of up to 90 per cent of the post-renovation value of their home up to $2 million, and amortize the refinanced mortgage over a period of up to 30 years.
  • By increasing the mortgage insurance home price limit to $2 million for those refinancing to build a secondary suite, we’re ensuring homeowners can access this refinancing in all housing markets across the country.

Building on mortgage refinancing for secondary suites, the government is now moving forward with its Budget 2024 commitment to launch a Secondary Suite Loan Program. This program will provide low-interest loans to help cover homeowners’ renovation costs.

  • The 2024 Fall Economic Statement proposes to double the loan limit for the Canada Secondary Suite Loan Program to $80,000. The program will make it cheaper to add secondary suites by offering 15-year loan terms at a low-interest rate of just 2 per cent, and will be administered by the Canada Mortgage and Housing Corporation. Funding would be sourced from existing departmental resources.

The Canada Secondary Suite Loan Program will launch in early 2025.

Helping Families Live Closer Together

Nav and Rohan purchased a home in Toronto in 2019. Nav’s parents, Bobby and Pal, currently live in a large single-family home in Brampton, but are looking to downsize and move closer to their daughter. Nav and Rohan plan to build a secondary suite on their property for Bobby and Pal to rent, with an expected cost of up to $140,000. They plan to apply to the new Canada Secondary Suite Loan Program, which offers up to $80,000 in low-interest financing to add a secondary suite to their home.

For the remaining $60,000, the recent changes to mortgage insurance rules will allow Nav and Rohan to refinance their insured mortgage to access the equity in their home to fund the rest of the project’s cost.

By combining insured mortgage refinancing for secondary suites with the Canada Secondary Suite Loan Program, Nav and Rohan can reduce the cost of financing their project. The rent from Bobby and Pal will also help make Nav and Rohan’s mortgage payments more manageable. By building a secondary suite, the family can live closer together, all while saving money.