Most Ontario homeowners know they can refinance up to 80% of their home's value. What fewer people know is that there's a program that pushes that ceiling to 90%, but only for one specific purpose: building a self-contained secondary suite.
If you've been thinking about adding a basement apartment, a laneway house, or a coach house, this program changes the math in a meaningful way. Here's what it is, how it works, and whether it fits your situation.
What Is the 90% LTV Secondary Suite Refinance?
This is an insured refinance program that lets owner-occupied homeowners access up to 90% loan-to-value (LTV) on their property, specifically to fund the construction or renovation of a secondary suite. The extra 10% above the standard 80% refinance limit exists because the government wants to increase housing supply. Adding a legal suite adds rental housing to the market, and Ottawa decided that goal is worth relaxing the normal equity rules.
Because the mortgage exceeds 80% LTV, it requires CMHC (or Sagen/Canada Guaranty) mortgage default insurance. That insurance premium gets added to the mortgage balance. That cost matters, and we'll cover it below.
Who Qualifies
To use this program you need to meet several conditions:
- Owner-occupied property. You must live in the home. This isn't available for pure investment properties.
- The suite must be self-contained. A separate entrance, its own kitchen, its own bathroom. A finished basement with a bedroom doesn't count. A legal basement apartment does.
- The suite must be new or substantially renovated. You can't use this program to access equity for an existing rental unit you already have.
- The property must be 1 to 4 units. Eligible for single-family homes, semi-detached, townhouses, and small multi-unit properties.
- Standard qualification rules apply. You still need to pass the stress test, meet income and credit requirements, and qualify for the larger mortgage amount.
The suite must be a permitted secondary unit under your municipality's zoning rules. An illegal suite won't qualify, and an illegal suite created with this money creates a different problem entirely. Check zoning before you apply.
How the Numbers Work
Here's a straightforward example to show what the program unlocks compared to a standard refinance.
Say your home is worth $900,000 and your current mortgage balance is $500,000.
- Standard refinance at 80% LTV: Maximum new mortgage = $720,000. Available for construction = $220,000 (minus your current $500,000 balance).
- Secondary suite refinance at 90% LTV: Maximum new mortgage = $810,000. Available for construction = $310,000 (minus your current $500,000 balance).
That's $90,000 more available to fund the build, without selling or bringing in outside investment. On a mid-range renovation budget, that difference is often the entire project.
The trade-off is the CMHC insurance premium. For a mortgage over 80% LTV, you'll pay a premium of 2.80% to 4.00% of the insured mortgage amount, added to the balance. On a $810,000 mortgage, that's a meaningful addition. Run the full numbers first with my refinance savings calculator, then confirm with your broker before you commit.
The extra 10% of equity exists to build housing. If you're adding a legal suite, it's one of the most practical tools available.
The Real Benefit: Building Rental Income
The financial case for a secondary suite isn't just the mortgage program. It's what the suite produces once it's built.
In Halton Hills, Georgetown, and across the GTA, a legal basement suite typically rents for $1,400 to $2,200 per month depending on size, finish, and location. Over a 25-year mortgage, that income stream matters considerably more than the one-time insurance premium.
Many clients use this program to fund a suite renovation and then use the rental income to aggressively prepay the mortgage. Done right, the suite pays for itself and then some.
How to Approach the Application
- Get a current appraisal or estimate of your home's value. This sets the ceiling on what you can borrow.
- Get at least two quotes for the renovation work. Lenders want to see that the funds will be used specifically for suite construction, not general home improvements.
- Confirm your municipality's zoning rules. The suite must be permitted. Your local planning department or a real estate lawyer can confirm this.
- Apply through a broker. Not all lenders offer this product. A broker who knows the insured refinance market will get you the right lender and the right rate.
- Close and fund in stages. Many lenders release suite construction funds in draws tied to build milestones rather than in a single lump sum.
Thinking about adding a suite to your home?
Book a call. We'll run the real numbers for your property and tell you honestly whether this program makes financial sense for your situation.
Book a Discovery CallWhen This Program Isn't the Right Move
This program is a good tool in the right situation. It isn't the right move for everyone.
- If the CMHC premium plus construction costs push your break-even point past 5 years and you're planning to sell before then, the math doesn't work.
- If you're already at 80% LTV or above on your existing mortgage, there may not be enough equity available regardless of the program ceiling.
- If your renovation budget exceeds what's available at 90%, you'll need to bridge the gap another way: savings, HELOC, or a construction draw facility.
- If the rental income in your area doesn't cover a meaningful portion of the new mortgage payment, the investment case weakens significantly.
For more on how refinancing works in Ontario generally, see my guide on what a lawyer does when you refinance.
Common Questions
Can I use this program if I already have a rental suite in my basement?
No. The program is specifically for new or substantially renovated suites. An existing rental unit doesn't qualify. The intent is to add new housing supply, not to pull equity out on something already built.
Do I have to use CMHC specifically, or are there other insurers?
Canada has three approved mortgage default insurers: CMHC, Sagen (formerly Genworth), and Canada Guaranty. Your lender will determine which insurer they use. From a borrower perspective, the premiums and rules are comparable across all three.
Will my existing mortgage rate change when I do this refinance?
Yes. You're taking out a new mortgage, so you'll be quoted a new rate based on current market conditions. If your existing mortgage has a significant prepayment penalty, that factors into whether the refinance is worth doing at all. Calculate the penalty before you commit.
Can I rent the suite to a family member?
Yes. There's no restriction on renting to a relative. However, if the suite will be occupied by family rent-free, lenders may not count the projected rental income when qualifying you for the larger mortgage. This affects how much you can borrow.
What happens if construction runs over budget?
The mortgage funds what was approved at closing. If the build comes in over budget, you're responsible for covering the difference. This is why it's important to get detailed quotes before you apply and build a contingency buffer into the plan.