CMHC 90% Refinance: The Primary Financing Tool (Available Now)
If you want to build a secondary suite in 2026, the most practical financing option available right now is the CMHC 90% Refinance program. Live since January 15, 2025, this program allows homeowners to refinance up to 90% of the post-renovation value of their home to fund suite construction. It is available through any CMHC-approved lender - the same banks you already deal with.
The core proposition: CMHC now recognizes that adding a legal secondary suite increases your home value, and allows you to borrow against that future value to fund the build. You refinance your existing mortgage at current market rates, and the rental income from the suite more than covers the increased payment.
| Detail | Value |
|---|---|
| Maximum Loan-to-Value | 90% of post-renovation appraised value |
| Interest Rate | Current market mortgage rates (5-6% in 2026) |
| CMHC Insurance Premium | 3.10% - 6.25% on the increased amount |
| Fund Disbursement | 4 construction draw payments at milestones |
| Available Through | Any CMHC-approved lender (major banks, credit unions) |
| Program Status | Live since January 15, 2025 |
How It Works: A Practical Example
Say your home is currently worth $400,000 with a $250,000 mortgage balance. You plan to build a one-bedroom suite for $75,000. After construction, your home appraises at $475,000. CMHC allows you to refinance up to 90% of $475,000 = $427,500. The difference between $427,500 and your existing $250,000 balance gives you up to $177,500 in available funds - more than enough to cover the $75,000 build. Your lender releases the construction funds through 4 milestone draw payments as the work progresses.
The CMHC Premium: A Hidden Cost to Know About
When you refinance above 80% loan-to-value, CMHC charges a mortgage insurance premium. This is calculated on the increase to your mortgage amount, not the full mortgage. The premium ranges from 3.10% to 6.25% depending on your loan-to-value ratio. On a $75,000 increase, the premium would be approximately $2,325 to $4,688. This is typically added to your mortgage balance, so you do not pay it upfront - but it does add to your total borrowing cost.
The Construction Draw Process
Unlike a lump-sum loan, the CMHC refinance releases funds in 4 construction draw payments tied to project milestones. This protects both you and the lender by ensuring work is completed before each payment is released.
- Draw 1: Foundation and Framing. Released after framing, rough-in plumbing, and electrical are inspected.
- Draw 2: Mechanical and Insulation. Released after HVAC, insulation, fire separation, and pre-drywall inspection.
- Draw 3: Finishing. Released after drywall, flooring, kitchen, and bathroom installation.
- Draw 4: Completion. Released after final inspection and occupancy approval from the municipality.
Important: You must receive CMHC approval before starting construction. Starting work before approval can disqualify you from the program.
Eligibility: Who Qualifies for the CMHC Refinance?
The program is designed for homeowners who live in their property and want to add a rental unit. Here are the key eligibility criteria.
- Owner-occupied. You must own the home and live in it as your primary residence. This is not a program for investment properties or rental portfolio expansion.
- 1-4 unit residential property. Your home must be classified as residential with between one and four units. Single-family homes, duplexes, triplexes, and fourplexes all qualify.
- New self-contained unit. The project must create a new, self-contained dwelling unit that did not exist before. The unit must have its own kitchen, bathroom, sleeping area, and separate entrance (interior or exterior).
- Building permit required. The work must be done with a valid building permit from your municipality. Non-negotiable.
- CMHC pre-approval before construction. You must apply through a CMHC-approved lender and get approval before breaking ground. Most major Canadian banks and credit unions participate.
Who Does NOT Qualify?
- Owners of investment properties who do not live on-site
- Properties with 5 or more existing units
- Projects that renovate an existing legal suite (must be a net-new unit)
- Mobile homes or recreational properties
- Homeowners who start construction before receiving CMHC approval
Ontario Bill 23 Context
Ontario's More Homes Built Faster Act (Bill 23, 2022) removed many zoning barriers to secondary suites province-wide. Municipalities must now permit up to three residential units on a single lot: the primary dwelling, one unit within the dwelling (e.g., a basement suite), and one detached unit (e.g., a garden suite or laneway house). In most residential zones in Greater Sudbury, you have the zoning right to build a secondary suite - the CMHC refinance provides the financing to actually do it.
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How to Apply: Step by Step
The application process is handled through your bank or credit union. Here is what to expect.
- Get a contractor quote. Before you apply, you need a realistic estimate of what the suite will cost. This means having a contractor visit your property, assess the basement, and provide a written quote or scope of work. You will submit this with your refinance application.
- Prepare your building permit. Your lender will want to see that you have a building permit or have applied for one. Some lenders accept a permit application in progress; others require the issued permit before disbursing funds.
- Apply at your bank. Visit your CMHC-approved lender (TD, RBC, Scotiabank, BMO, CIBC, and most credit unions participate). Bring your contractor quote, building permit documentation, proof of homeownership, proof of primary residence, and standard financial documentation (income, debts, credit check).
- CMHC approval (2-4 weeks). The lender reviews your application and confirms eligibility through CMHC. Approval timelines vary by lender but typically take 2-4 weeks. You must wait for approval before starting construction.
- Construction begins with draw payments. Once approved, your contractor begins work. Funds are released in 4 draw payments at milestone stages. Your lender requires proof of completed work (inspection reports or contractor invoices) before releasing each draw.
- Build and occupy. Complete construction, pass your final inspection, and begin renting the unit. Your increased mortgage payment begins according to your refinance terms.
Canada Secondary Suite Loan Program - CSSLP (Announced, Not Yet Available)
The federal government announced the Canada Secondary Suite Loan Program as part of its 2024 housing strategy. It was designed to offer up to $80,000 at a fixed 2% interest rate over 15 years - significantly below market rates.
Program Status: Not Yet Launched
As of August 2025, the CSSLP application details have not been posted and the program is not accepting applications. The launch timeline remains unclear, and there is speculation that it may be postponed. We will update this page when the program becomes available. In the meantime, the CMHC 90% refinance is the proven, available path to financing your suite build.
If the CSSLP launches as announced, the numbers look compelling: at $80,000 with 2% interest over 15 years, the monthly payment would be approximately $515/month. The total interest savings would be significant: roughly $15,000-$25,000 less in total interest paid over the life of the loan compared to conventional financing.
Other Available Programs
Multigenerational Home Renovation Tax Credit (MGHRTC) - Live
The MGHRTC allows you to claim 15% of up to $50,000 in qualifying renovation expenses, for a maximum tax credit of $7,500. Important restriction: the renovation must create a secondary unit for a qualifying senior (65+) or an adult with a disability who will live in the unit. If your suite is being built for general market rental and not for a qualifying relative, you do not qualify for this credit. It is a non-refundable tax credit claimed when you file your annual tax return.
Ontario Renovates (Varies by Municipality)
Ontario Renovates is administered through municipal housing services and can provide up to $25,000-$30,000 in forgivable loans for secondary suite creation. Eligibility is income-tested, and the suite typically must be rented at or below average market rent for a specified period. In Greater Sudbury, current program availability and intake status should be confirmed directly with the City housing services department. "Forgivable" means that if you meet the program conditions (typically renting at affordable rates for 10-15 years), part or all of the loan does not need to be repaid.
Available Funding Summary
| Program | Amount | Type | Status |
|---|---|---|---|
| CMHC 90% Refinance | Varies by equity | Mortgage refinance (market rates) | Live since Jan 2025 |
| CSSLP | Up to $80,000 | Low-interest loan (2%, 15yr) | Announced - not yet launched |
| MGHRTC | Up to $7,500 | Non-refundable tax credit | Live (seniors/disability only) |
| Ontario Renovates | Up to $25-30K | Forgivable loan | Varies by municipality |
For most homeowners today, the CMHC 90% refinance is the practical path. If you also qualify for the MGHRTC (suite for a senior or person with a disability) or Ontario Renovates (income-tested, check with your city), those can supplement your financing. When the CSSLP launches, it may become the most cost-effective option - but it is not available yet.
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Cash Flow Analysis: Does the Math Work?
This is where the CMHC refinance becomes compelling. Let us run the numbers for a typical Sudbury secondary suite.
Scenario: One-Bedroom Suite, $75,000 Build (CMHC Refinance)
| Item | Monthly | Annual |
|---|---|---|
| Rental Income (1-bed, Sudbury avg) | $1,300 | $15,600 |
| Increased Mortgage Payment ($75K + CMHC premium at ~5.5%, 25yr) | ($490) | ($5,880) |
| Insurance Increase (estimated) | ($40) | ($480) |
| Maintenance Reserve (5%) | ($65) | ($780) |
| Vacancy Allowance (1 month/year) | ($108) | ($1,300) |
| Net Cash Flow | +$597 | +$7,160 |
You are cash-flow positive from month one. The suite generates approximately $597 per month in net income after the increased mortgage payment, insurance, maintenance, and vacancy are accounted for. If the CSSLP launches at its announced 2% rate, the monthly payment drops and cash flow improves further.
If CSSLP Launches (Future Scenario)
For comparison, if the CSSLP becomes available at 2% over 15 years: the $75,000 loan payment would be approximately $483/month instead of $490/month via refinance, and total interest paid would be roughly $12,000 instead of $55,000+. That is a significant long-term saving - but it requires the program to actually launch.
Property Value Impact
Beyond the monthly cash flow, a legal secondary suite increases your property value. In the Greater Sudbury market, a permitted secondary suite typically adds 60-80% of the construction cost to the appraised value. On a $75,000 build, that is an immediate equity gain of $45,000-$60,000.
This means that even if you decided to sell the property shortly after building the suite, you would recover a significant portion of your investment through the higher sale price - on top of whatever rental income you collected while you owned it.
Who This Is NOT For
The CMHC refinance and related programs are specifically designed for owner-occupants who want to add rental housing supply. They are not tools for scaling a rental portfolio. Specifically:
- Investors with non-owner-occupied properties. If you own a rental property that you do not live in, you cannot use these programs for that property.
- Owners of 5+ unit buildings. The programs are limited to 1-4 unit residential properties.
- Renovation-only projects. If you already have a legal secondary suite and want to renovate it, these programs do not cover that. It must be a net-new unit.
- Starting before approval. With the CMHC refinance, you must have approval in hand before construction begins. This is a common mistake that disqualifies homeowners.
What Happens Next
If you think the CMHC refinance might work for your situation, here is a practical path forward.
- Assess your basement. Before you apply for anything, find out if your home is a good candidate for a secondary suite. Ceiling height, plumbing location, electrical capacity, and foundation condition all matter. We offer free on-site assessments for homeowners in Greater Sudbury.
- Get a contractor quote. Your lender will need a written quote or scope of work. This gives you a realistic number to base your refinance application on.
- Talk to your bank. Ask about the CMHC 90% refinance for secondary suites. They can tell you exactly what documentation they need and how much additional borrowing room you have based on your current equity.
- Apply for your building permit. Your contractor can handle this, or you can work with a designer to prepare the drawings and submit the application to the City of Greater Sudbury.
- Wait for CMHC approval before starting. This is critical. Do not begin construction until your refinance is approved.
For a detailed breakdown of what suites cost in this market, see our 2026 Secondary Suite Cost Guide. For everything you need to know about building code requirements and the permit process, read our guide to building a legal basement apartment in Greater Sudbury.