Government Grants & Loans

Canada's federal government has announced a plan to build nearly 3.87 million homes by 2031 to address the housing crisis, aiming to increase housing supply, make it easier to rent or own, and help Canadians afford homes. The budget calls for 6 billion dollars in financing.

Secondary suites are an ideal solution to our affordable housing crisis including Garden Suites, basement suites and Laneway Homes.
Secondary Suites offers two big advantages over building new homes as the cost is much lower and the infrastructure already exists.

Loan Programs and Forgivable Loan Programs available in Canada;
The Ontario Renovates Secondary Suite Forgivable Loan Program aims to increase the supply of affordable housing units in Hamilton, while creating an opportunity for homeowners to generate additional income.
Funding of up to $40,00 in forgivable loans but the funding is to be released starting April 01, 2025. The loan is advanced once the building permit is approved and an occupancy permit is issued. You will then have 120 days to submit a rental agreement at below market rent. These loans are forgivable after 15 years and available throughout Canada.

British Columbia https://www.bchousing.org/housing-assistance/secondary-suite
Homeowners who qualify will receive 50% of the suite construction costs, to a maximum of $40,000. The program will provide a rebate in the form of a forgivable loan—a loan that does not need to be repaid if the homeowner follows the terms of the program.

For the loan to be forgiven, the new unit must be located on the same property where the homeowner lives and must be rented out at below market rates, set by BC Housing, for at least five years.

In Alberta, the Secondary Suite Incentive Program (Calgary) and the Cornerstones Grant Program (Edmonton) offer financial assistance to homeowners building or legalizing secondary suites, with grants up to $10,000 and $20,000 respectively, to encourage safe and affordable housing.
The Saskatchewan Secondary Suite Incentive (SSI) grant program provides 35% of the cost to build a new secondary suite on an owner's primary residence, up to a maximum of $35,000, aiming to increase rental unit availability and improve housing affordability.

Manitoba Housing offers a Secondary Suites Program providing eligible homeowners with a forgivable loan for up to 50% of the total construction/renovation costs, to a maximum of $35,000, to build secondary suites, including garden suites and carriage houses.

Quebec. Only federal loans programs are available at this time. No provincial loans or grants.

The Nova Scotia Secondary and Backyard Suite Incentive Program offers eligible homeowners forgivable loans of up to $40,000 (50% of eligible project costs) to build secondary or backyard suites, encouraging affordable housing options.

New Brunswick, homeowners can access forgivable loans through the Social Supports NB program to create secondary/garden suites or extensions for an adult with a disability, with a maximum loan of $24,000, and potentially repayable loans for costs exceeding this amount.

in Newfoundland and Labrador, the Secondary and Basement Suite Incentive Program offers homeowners forgivable loans of up to $40,000 to create new secondary or basement suites, with the loan forgiven if the unit is rented below market rates for at least five years.

Prince Edward Island (PEI) doesn't have a specific, named "secondary suite grant program" like some other provinces, homeowners can access funding through the PEI Home Renovation Program for renovations to create or improve secondary suites, with a maximum of $12,000 for eligible work.

North West Territories; There is nothing specifically mentioned for the NorthWest Territories but there are some programs available through NWT Housing Corporation.
Yukon. Funding is available through the Yukon Housing Corporation office
The Housing Initiatives Fund provides funding for affordable rental housing projects across the Yukon.

There are 2 streams:

shovel-ready projects in the Yukon; and
project concepts

Eligible projects must include a minimum of 4 affordable units in Whitehorse and 1 unit in communities.

You can combine the Housing Initiative Fund with other government funding programs.

Shovel-ready projects are eligible for up to $100,000 for each unit up to a maximum of $1,000,000.
Projects concepts are eligible for up to $20,000.
Units must exceed the National Building Code for energy efficiency by 25 per cent.
A minimum of 1 unit or 20 percent of the units must be barrier-free and built to accessibility standards.
Units designated as affordable must remain affordable for 20 years.

Nunavut. there's no specific "secondary suite grant program" currently in Nunavut, the federal government has announced a new Canada Secondary Suite Loan Program.

CMHC will be managing the Secondary Suite Loan incentive program governed by Infrastructure Canada. Borrow up to $80,000 at 2% and CMHC will also extend additional financing to existing CHC mortgage holders. Funding will be available throughout Canada. Funding should be available after April 01, 2025.

The housing shortage is specifically catered to low-income or affordable housing options for Canadians. The rents must be below market rate and the guideline for what can be charged is based on information obtained through your local landlord and tenant board. Although rent will be below market value you can claim a rental loss for the difference between the market rental rate and the below market rate rental as a rental loss on your taxes.

The building code requirements are set-out in the National building code of Canada 2020.

Capital Loss. When your expenses exceed the income on your rental property, you may be able to claim a rental loss. Before you can claim the loss, you'll need to determine whether it's rental income or business income. Both are treated differently for tax filing purposes.

In addition to the Secondary Suite Loan Program, homeowners will also be able to refinance with insured mortgages to help cover the cost of adding a secondary suite, starting January 15, 2025. Specifically, lenders and insurers will begin allowing mortgage refinancing of up to 90 per cent of the post-renovation value of their home up to $2 million, amortized over a period of up to 30 years. Homeowners will be able to make use of both the loan program and mortgage financing to help cover the cost of adding a secondary suite.

Beyond helping homeowners increase Canada’s supply of rental housing, we’re also making the boldest mortgage reforms in decades to unlock homeownership for Canadians. Starting December 15, 2024, new mortgage rules will lower down payment requirements for homes valued between $1 million and $1.5 million, and expand the availability of 30-year amortizations to reduce monthly mortgage payments for all first-time home buyers and all purchasers of new builds.

As we build 4 million more homes, communities need help building more infrastructure. That is why the federal government is investing $6 billion through the Canada Housing Infrastructure Fund to build and upgrade core infrastructure in communities, including drinking water, wastewater, stormwater, and solid waste infrastructure. The government has started negotiations with provinces and territories on key actions they can take to increase housing supply, in exchange for their share of $5 billion in federal funding. To deliver funding for urgent municipal infrastructure priorities, applications for the $1 billion municipal stream.

Homeowners in Canada can access both loans and grants to help fund garden suite projects through programs like the Canada Secondary Suite Loan Program, which provides low-interest loans, and potentially through municipal programs offering grants or development fee deferrals.

Canada Secondary Suite Loan Program (CSSLP):

This program, launched in 2024, allows homeowners to access low-interest loans of up to $80,000 to build or renovate secondary suites, including garden suites.

Forgivable Loans:
Some programs, like the Ontario Renovates – Secondary Suites sub-component of the Ontario Priorities Housing Initiative, offer forgivable loans, meaning the loan doesn't need to be repaid if the homeowner follows the program's terms.

Insured Refinances:
Homeowners can also access insured refinances to help cover the cost of adding a secondary suite, according to Canada.ca.

Grants and Incentives:

Municipal Programs:
Some cities, like Toronto, offer development fee deferrals and grants for laneway homes, which can apply to garden suites as well.

Information about the forgivable loan programs and the loan incentive programs vary from one province to another and there are subtle differences is the treatment of these loan programs in certain municipalities or counties.

Rough Guidelines;

Secondary Suite Incentive Program aims to increase the availability of affordable housing by providing financial support to homeowners looking to create secondary suites. These suites, also known as accessory dwelling units (ADUs), can be a valuable addition to your property, offering an additional source of income and contributing to the solution of the housing crisis.

Key Features of the Program

The Secondary Suite Incentive Program offers several key benefits to eligible homeowners:

Up to $40,000 in forgivable loans to cover 50% of the construction costs for new secondary suites.
Encourages the development of basement suites, laneway houses, and garden suites.
Helps create affordable rental housing by setting below-market rental rates for the units.
Support for building accessible and barrier-free units for seniors and individuals with disabilities.

Eligibility Criteria

To qualify for the Secondary Suite Incentive Program, homeowners must meet the following criteria:

Be the registered owner of the property and use it as their primary residence.
Have a combined gross annual income of less than $209,420 for all owners on the title.
The property must have an assessed value below the homeowner grant threshold ($2.15 million in 2024).
Obtain necessary building permits from local authorities for the new suite.
Rent the new suite at below-market rates for at least five years to qualify for loan forgiveness.

Application Process

Follow these steps to apply for the Secondary Suite Incentive Program:

Plan Your Project: Assess your property’s potential for a secondary suite and consult with local zoning officials to ensure compliance with all regulations.
Secure Financing: Discuss financing options with your lender and ensure you have the funds to cover your share of the construction costs.
Obtain Permits: Apply for the necessary building permits from your local municipality. Ensure that the plans meet all building codes and zoning requirements.
Submit Your Application: Complete the application form for the Secondary Suite Incentive Program, including all required documentation such as proof of income, property ownership, and building permits.
Complete Construction: Once approved, proceed with the construction of your secondary suite. Ensure that all work is inspected and meets the required standards.
Rent Your Suite: Upon completion, rent out the suite at the agreed below-market rates for a minimum of five years to qualify for loan forgiveness.

Benefits of Creating a Secondary Suite

Developing a secondary suite offers several advantages:

Additional Income: Generate rental income to help cover mortgage payments and other expenses.
Increase Property Value: Enhance the value of your property by adding a rentable unit.
Affordable Housing: Contribute to the availability of affordable rental housing in your community.
Flexibility: Provide housing for family members, such as aging parents or adult children, while maintaining privacy.

Conclusion

The Secondary Suite Incentive Program in Ontario and other provinces. territories provide a valuable opportunity for homeowners to improve their financial stability and contribute to the community by creating affordable rental housing. By understanding the program’s benefits and eligibility criteria, and following the application process, you can successfully develop a secondary suite that meets your needs and benefits your community.

Comprehensive Guide to Secondary Housing Support Programs in Canada and Ontario: Federal and Regional Programs

Creating affordable rental housing is a key task of government policy in Canada and the province of Ontario. To support homeowners willing to create secondary housing units, such as Garden Suites and separate apartments, federal and regional programs have been developed. These programs offer financing in the form of a forgivable loan, which can be canceled if the program conditions are met. It is important to understand that despite the forgiveness, this is borrowed money that may be reclaimed in case of non-compliance with the program conditions.

Loan Terms and Format

Funding under the programs is provided as an interest-free forgivable loan. This means that if you comply with all program conditions, such as renting out the housing at an affordable rental rate and maintaining energy efficiency, you will not have to repay the loan amount. However, if the program conditions are violated (for example, if the rental rate is higher than allowed), the organization that provided the loan may require its return.

Monitoring and Compliance

During the program term, which can range from 10 to 15 years, the organization that issued the funding will conduct inspections. The homeowner must be prepared for the following:

Annual checks of the rental rate and energy efficiency level to ensure compliance with program conditions.
The owner is obliged to provide documents confirming the rental of housing at an affordable rate and compliance with energy efficiency standards.
In case of non-compliance with the conditions, the program may require repayment of the loan.

Federal Secondary Housing Support Program

The federal program provides an interest-free forgivable loan of up to $40,000 for homeowners who create energy-efficient additional housing and are willing to rent it at a reduced rental rate. The main goal of the program is to improve housing affordability across Canada.

Key Conditions of the Federal Program:

Loan Amount: Up to $40,000.
Purpose: Covering costs for the construction of secondary housing.
Loan Forgiveness Conditions: The housing must be rented at an affordable rental rate (usually 80% of the market value) and meet energy efficiency standards.
Rental Term: From 10 to 15 years, depending on the region.
Monitoring: Annual inspections, including checks of energy efficiency levels and affordable rental rates.

Step-by-Step Instructions for Participating in the Federal Program

Assess Eligibility Requirements: Before applying, check if your project is suitable for participation in the program.
Collect Documents: Prepare a project plan, energy efficiency documents, and a declaration of renting the housing at an affordable rate.
Complete the Application: Submit the application on the website Canada Mortgage and Housing Corporation (CMHC).
Verification and Receipt of Funds: Funds will be paid out in parts as construction stages are completed.
Compliance with Program Conditions: Mandatory compliance with rental and energy efficiency conditions; otherwise, the loan may be reclaimed.

Regional Support Programs in Ontario

Each county in Ontario has its own affordable rental housing support programs with different loan amounts and conditions. These programs are designed to support the construction of housing that must be affordable in terms of rental rate and rented out for an established term.

How to Apply for the Secondary Suite Loan Program

The Secondary Suites Program is supported by municipalities and counties throughout Canada and our federal government. It provides financial assistance in the form of a forgivable loan for 15 years, up to $30,000, to create secondary or garden suites. Funding is limited and allocated on a first-come, first-served basis, with priority given to projects ready for construction.

Key Eligibility Criteria:

Property Ownership: Applicants must own the property where the garden suite is to be constructed.
Code Compliance: The creation of a secondary or garden suite must comply with all municipal and building codes.
Tax and Mortgage Payments: Property taxes and mortgage payments must be up to date.
Insurance: Insurance must cover the full replacement value of the property.
Residency: Applicants must be Canadian citizens, permanent residents, or refugees.
No Bankruptcy: Applicants must not be undergoing bankruptcy.
Debt-to-Value Ratio: The total of all mortgages and liens on the property must not exceed its market value.

Eligible Projects:

Secondary or garden suites: Housing must be available for affordable rental and comply with municipal and Ontario Building Code standards.
Construction Deadlines: Construction must begin within 120 days of project approval.
Rental Rates: Rental rates must remain affordable for 15 years.

Eligible Costs:

Legal services up to $1,000.
Labour and material costs.
Accessibility modifications up to $5,000 (e.g., ramps, lifts, special signaling devices).

Ineligible Projects:

Renovations started before approval.
Cosmetic upgrades and landscaping.
Solar panels and health-support equipment.

Funding Details:

Maximum $30,000 per property.
Accessibility modifications up to $5,000 provided as a grant.
Loan forgiveness over 15 years if conditions are met.

Landlord Responsibilities:

Rent must remain at the average market rate for 15 years.
Annual rental reports are mandatory.

Tenants must meet income eligibility requirements.

Violation Conditions: If conditions are violated (e.g., property sale or overcharging rent), the loan must be repaid.

2. Frequently Asked Questions (FAQ) for the Secondary Suites Program

Funding Amount: Maximum loan amount is $30,000. The amount depends on the cost of creating the unit and the available equity in the property.

Forgivable Loan: The loan amount reduces in equal parts annually over 15 years. If all conditions are met, no repayment or interest is required.

Security: The loan is secured by a mortgage on the property title. Costs for releasing the mortgage are paid by the owner.

Existing Mortgages: If there is an existing mortgage, the loan will be secured as secondary, provided the total encumbrance does not exceed the property’s market value.

Loan Disbursement Stages:

Legal fees: $528.35
Plumbing inspection: $7,367.92
Framing and insulation inspection: $7,367.91
Drywall and fireproofing inspection: $7,367.91
Final inspection: $7,367.91

Additional Questions:

Multiple Properties: Allowed but must be disclosed.
Waiting for Funding: Work started before approval is not reimbursed.
Renting to Relatives: Allowed if income eligibility is met.
Rental Rates: Must not exceed CMHC market rates for the region and include utilities.

Legal Aspects: It is recommended to use Ontario’s standard lease agreement. A standard form is available on the provincial government’s website.

Loan Repayment Conditions: If the unit is not rented or the property is sold before the loan term ends, the remaining loan amount must be repaid.

3. Application Steps

1. Complete the application form with project details and attach the required documents.

Visit the website for your local municipality or county office and select the “Housing Programs” or the low income housing section for basic information on housing programs.
Explore the “Affordable Housing Programs” section: Under “Housing,” choose “Affordable Housing Programs” to access information about the Secondary Suites Program, including available funding amounts and key eligibility conditions.
Download and review the following documents:
Fact Sheet — A summary of the program, eligibility conditions, eligible expenses, and landlord responsibilities.
Application Package — The application form and a list of required documents.
Schedule A — Rental rate limits and tenant income requirements.
Complete the Application Package and attach all required documents, including proof of identity, ownership documents, proof of no outstanding property taxes, and insurance coverage.

2. Submit the application to your municipality or county office.

Next Steps: Once the application is approved, funding is provided based on the completion of inspections at each construction stage. To receive each disbursement, inspections must be passed, and reports submitted.