Exciting news for Canadian homeowners: the government has doubled the loan limit for secondary suites, increasing it from $40,000 to $80,000. Announced this past week by Deputy Prime Minister Chrystia and Housing Minister Sean Fraser, this game-changing update is part of an enhanced program set to launch in early 2025. With this significant boost in funding, homeowners will find it easier than ever to add rental units, such as additional dwelling units (ADUs), to their properties.
Whether you’re looking to generate rental income or create more housing options for family members, this expanded opportunity empowers more Canadians to take advantage of the growing demand for flexible living spaces.
What the New Loan Limit Means for Canadians
The newly doubled loan limit opens up a world of possibilities for homeowners ready to build secondary suites. Here’s how this update can work for you:
Access Up to $80,000 in Low-Interest Financing
With the new program, homeowners can secure up to $80,000 at a low 2% interest rate, spread over 15 years. This funding is ideal for projects like basement apartments, laneway homes, or garden suites, helping you expand your property’s functionality and value without overwhelming upfront costs.
New Refinancing Option Starting January 2025
Starting January 15, 2025, an insured mortgage refinancing option will offer even more flexibility. Homeowners can:
- Borrow up to 90% of their home’s post-renovation value, capped at $2 million
- Choose an extended amortization period of up to 30 years for manageable payments.
- Combine the secondary suite loan program with this refinancing option for comprehensive funding to cover every aspect of your ADU project
More Funds for Better Quality
An $80,000 loan can go a long way, covering a larger portion of construction costs and allowing for high-quality finishes. From durable materials to energy-efficient appliances and customized design elements, this higher limit ensures you don’t have to compromise on your vision.
By combining innovative financing options with this substantial loan increase, the program ensures more Canadians can create secondary suites to generate rental income, support family members, or add to the housing supply.
Why ADUs Are the Smart Choice: A Real-Life Example
Let’s say Jane and Michael are considering building a secondary suite on their property in Kingston, Ontario. Their property is currently valued at $800,000, and the cost to build the backyard home would be an additional $200,000. Financing the full amount at a 6% mortgage rate would add approximately $1,146.29 per month to their payments. However, by securing a 2% loan on $80,000 of the construction cost, they could reduce their additional monthly payments to $977.85, saving them nearly $168.44 per month and making the project more affordable. In 20 years, having the loan saved them $40,425.16 in total!
Here’s how their secondary suite worked out to their advantage:
Generate Rental Income
The couple converted their detached garage into a modern one-bedroom ADU, which they rented out for $2,000 per month. With Kingston’s high demand for affordable housing, they had no trouble finding tenants. The rental income not only covers a significant portion of their mortgage but also provides extra financial security.
Support Multigenerational Living
Thinking into the future, they knew Jane’s parents would want to downsize one day, so they chose an ADU model that could accommodate them. The independent living space will allow her parents to maintain their privacy while staying close to family. This setup proves invaluable, especially during times when caregiving is needed.
Why Build Now?
With growing housing needs across the country, there’s never been a better time to invest in an ADU. The recent increase in loan limits to $80,000 and new financing options launching in 2025 make it easier than ever to bring your vision to life. By acting now, you’ll not only contribute to the housing solution but also position yourself to maximize the financial and lifestyle advantages of having an ADU.
Navigating the Loan Process
Securing funding for your secondary suite is now more accessible than ever, but understanding the loan process is essential to ensure a smooth experience. There are a few requirements for accessing the $80,000 low-interest loan. You must:
- Be a homeowner with a property eligible for a secondary suite, such as a single-family home, duplex, or similar residential unit
- Demonstrate the ability to repay the loan through proof of income or financial stability
- Use the funds exclusively for building or upgrading a secondary suite that complies with local building codes and zoning laws
Tips for Applying Effectively
Plan Ahead
Prepare a detailed budget and project timeline to ensure you understand the costs and phases of your build. Resimate has a suite of tools to help you plan your project, from a Financial Calculator to a comprehensive On-Site Assessment (that our team can do for you!).
Gather Supporting Documents
Provide all necessary paperwork, such as proof of ownership, financial statements, and project plans, to streamline the approval process. Take the time to book an On-Site Assessment to discuss your project, plan for all the necessary permits, and make sure your project is done right from the get-go.
Leverage Expert Advice
Work with professionals such as contractors and financial advisors to maximize your funding and stay on track. Resimate has a network of professionals well-versed in ADU projects to help guide you along your way. Book a call with one of our experts today.
Combine Financing Options
Consider pairing the loan with the insured mortgage refinancing option to cover all aspects of your project, from construction to high-quality finishes. Resimate has made it easier than ever for the average homeowner to secure financing by teaming up with RBC. Find your perfect financing today!
Build Your Secondary Suite With Resimate
The increased loan limit to $80,000 is going to be big for homeowners looking to build secondary suites. With more accessible financing and innovative options like insured mortgage refinancing, creating an ADU has never been more achievable. Whatever the reason—be it generating rental income, supporting multigenerational living, or enhancing your property’s value—now is the perfect time to act.
At Resimate, we’re here to guide you every step of the way. From expert planning and design to construction tailored to your budget and lifestyle, we provide customized solutions that bring your vision to life.
Let’s make your ADU a reality—book a call with Resimate today to explore all your secondary suite options!
