The Secondary Suite Loan Program Never Launched: How to Pay for a Basement Suite

The short answer

The federal Canada Secondary Suite Loan Program, announced at up to $80,000, never opened. Budget 2025 says it "is not yet operational" and "will not be implemented." As of October 2026, CMHC offers an insured mortgage refinance for building a suite, arranged through a lender. The City of Peterborough's housing rebates and loan don't cover a basement suite, because they exclude additional residential units by name.

If you searched for the $80,000 loan, you may have landed on a page that tells you how to apply. That page is out of date. This one covers what happened to the loan, what funding exists as of October 2026, and which Peterborough programs a basement suite does not qualify for. It is not mortgage or tax advice, and programs change, so confirm each one at its linked source.

What the $80,000 loan was, and what happened to it

The 2024 Fall Economic Statement, in December 2024, proposed doubling the loan limit for the Canada Secondary Suite Loan Program to $80,000. It described 15-year terms at 2 per cent, administered by CMHC, and said the program would launch in early 2025 (2024 Fall Economic Statement, Chapter 1).

It did not launch. Budget 2025, in November 2025, says in its list of planned CMHC reductions: "The Canada Secondary Suite Loan program, which is not yet operational, will not be implemented as it has a large potential to overlap with the government's homeowner insured mortgage rule changes announced in January 2025" (Budget 2025, Annex 3).

A program that will not be implemented has no application to submit.

Why old pages still tell you to apply

Pages written when the loan was announced said it would launch in early 2025, and a page does not update itself. Even the federal government's own Canada's Housing Plan: Programs and initiatives page still lists the loan program. It carries a notice that the page has been archived and has not been updated since.

Before you plan around any program, find it on the government's or lender's own page and note when that page was last updated.

What exists instead: CMHC Refinance

The 2024 Fall Economic Statement said that starting January 15, 2025, homeowners could refinance with an insured mortgage to build a secondary suite. CMHC's page for the product is written for lenders. As of October 2026 it sets these conditions:

• You own the home, and you or a close relative live in it.
• The suite is self-contained and complies with applicable bylaws and regulations. It cannot be a short-term rental, meaning rented for less than 90 consecutive days.
• The extra money must go to building and completing the suite. CMHC says taking equity out is not permitted.
• CMHC must approve the insured financing before construction starts, or at least at an early stage.
• Financing is up to 90% of the home's lending value, which must be below $2,000,000, over an amortization (the time allowed to pay the mortgage off) of up to 30 years.
• CMHC lists the documents it wants. They run from an improvement list, cost estimates or quotes and building plans, to a building permit, and finally an occupancy permit or a report from a qualified professional confirming the work complies.

CMHC also sets credit and debt tests and charges an insurance premium, and its page says the information is subject to change at any time. A lender can tell you what you would be approved for, and when each document is due.

A worked example, with made-up numbers

CMHC's page says the lending value is the lesser of the as-improved value (the finished home), or the as-is value (the home today) plus the cost of improvements. Say your house is worth $500,000 today, the suite will cost $100,000, and an appraisal puts the finished home at $650,000. The lesser of $650,000 and $600,000 is $600,000. At the 90% limit, the most that could be insured against that value is $540,000 in total. Ask a lender how an existing mortgage counts toward that limit.

Using the appraisal alone would give $585,000, so the lesser-of rule takes $45,000 off. These numbers are invented to show the rule, not what a lender would approve.

What the City of Peterborough offers, and who it leaves out

The Missing Middle plan does not cover a basement suite. The City's Missing Middle Community Improvement Plan, amended January 2026, sits behind three programs: a development charge rebate, a building permit fee rebate and an interest-free municipal loan (the City's summary). In its general eligibility section, the plan says eligible buildings are "purpose-built missing middle buildings, as opposed to ARUs which are not eligible for funding under this program." It also says proposals "aimed at legalizing an existing non-complying residential use/unit are not eligible."

The plan quotes the City's zoning by-law, which says an additional residential unit (ARU) is also called a second unit, basement apartment, accessory apartment, granny flat, in-law apartment or nanny suite. A basement suite is an ARU, so these rebates and this loan are not for it. The City's summary page also mentions up to four units on a lot in two residential zones. That is purpose-built housing. The limits for a basement suite are in the rules for building a basement suite in Peterborough.

Development charges. The City's plan says Ontario, through Bill 23, exempts ARUs from development charges and parkland dedication requirements. The statutes word it more narrowly. Under subsections 2 (3.2) and (3.3) of the Development Charges Act, 1997, creating a second or third residential unit in a detached house, semi-detached house or rowhouse is exempt from development charges. This applies only if the other buildings on the lot meet set limits. For a second unit, all the ancillary buildings (the other buildings on the lot) together can hold no more than one residential unit. For a third unit, none of them can hold any. One unit in an ancillary building is exempt if the house holds no more than two units and no other ancillary building holds any.

Subsection 42 (1.3) of the Planning Act says a parkland dedication by-law does not apply to the same units. Both read this way on e-Laws as of October 22, 2026. This is a charge you don't pay, not money paid to you. Confirm it with the City.

The Affordable Housing plan. The City's separate Affordable Housing Community Improvement Plan is for projects where each unit meets the City's definition of affordable, under an agreement registered on title.

Peterborough Renovates. The City's Help for Homeowners page describes a forgivable loan of up to $25,000 for repairs such as roofing, plumbing and heating, plus accessibility modifications. Applicants need a gross annual income of $95,000 or less and a home with an MPAC (Municipal Property Assessment Corporation) value of $600,000 or less. Work done before you apply is not eligible, and the program ends when funding is allocated. The page lists repairs, not building a suite, so ask the City whether a project would qualify.

Rent figures, and what they do not measure

If the suite will be a rental, two public sources publish Peterborough rents. Neither breaks out basement suites, so neither tells you what yours would rent for.

• CMHC, October 2025. In the Rental Market Survey for the Peterborough census metropolitan area, the average rent for row and apartment units is $1,232 for a one-bedroom and $1,513 for a two-bedroom (CMHC table). CMHC says the survey "targets only privately initiated structures with at least 3 rental units, which have been on the market for at least 3 months" (CMHC method). A house with one basement suite has two units, so it falls outside that survey.
• Statistics Canada, second quarter of 2026. The average asking rent in the same area is $1,600 for a one-bedroom apartment and $1,920 for a two-bedroom apartment, from experimental estimates (Table 46-10-0092-01). The table's categories are apartments by bedroom count, houses and rooms. None is labelled a basement suite, and for Peterborough the house rows have no figures.

These are rents for whole units in other buildings, not a forecast for yours. They say nothing about what a suite costs to build or run, or about tax on rental income, so they do not show whether a suite pays for itself. For tax, ask an accountant and read CRA's page on rental income.

Put the steps in order

1. Check the rules for your house

   Zoning, parking and the path for firefighters decide whether a suite is possible at all. Start with the City's suite rules and, for the basement itself, the permit path for finishing a basement. If you are weighing a separate unit in the yard instead, see what the City allows for a garden suite.

2. Get a written, itemised quote

   CMHC lists cost estimates or quotes among its documents, and a tax claim later needs invoices that describe the work.

3. Talk to a lender before work starts

   CMHC's approval has to come before construction, or at an early stage. Ask the lender what it needs and when.

4. Keep every receipt and invoice

   The multigenerational tax credit needs invoices and proof of payment, and CRA takes anything reimbursed, including assistance you receive, off what you can claim. See whether an in-law suite qualifies for the multigenerational tax credit.

Any loan or credit in this article is applied for by you, through your lender or on your own tax return. For a basement suite project, Gilbert Brothers gives a free estimate at your home and a quote for the whole job before work starts. See basement renovations or get in touch.

Frequently asked questions

Is the Canada Secondary Suite Loan Program coming back?+

Budget 2025 says it will not be implemented. The sources behind this page show nothing since then that brings it back. Check CMHC and Canada.ca before relying on any new announcement.

Does the City of Peterborough pay for a basement suite?+

Its Missing Middle rebates and loan exclude ARUs, which the City's zoning by-law says include basement and in-law apartments. Peterborough Renovates is income-tested repair funding. Ask the City what applies to your project.

Can I use CMHC Refinance to build a suite for my parents?+

CMHC's page says at least one unit must be occupied by the borrower, or by a person related to the borrower by marriage, common-law partnership or any legal parent-child relationship, on a rent-free basis. Ask a lender how that applies to your family.

Is the multigenerational tax credit the same as a loan?+

No. It is a refundable tax credit claimed on a tax return after the renovation is complete, so it does not pay for construction. See the guide to the multigenerational home renovation tax credit.