With housing in high demand, many homeowners are turning untapped space into legal rental suites. A new mortgage program helps you do just that — while boosting your own property value.
What Is “Refinance Plus Improvements”?
This program allows current homeowners to refinance their mortgage and borrow additional funds to create a legal rental suite within their property.
It’s designed to support homeowners while also helping ease Canada’s housing crunch by adding more long-term rental units to the market.
How It Works
Here’s the big picture:
- You must already own and live in the property (at least one unit must remain your primary residence).
- Funds can be borrowed against the future value of your home (after the improvements).
- The maximum financing is up to 90% of the improved value, to a maximum mortgage of $2,000,000.
- The additional suite must be:
- Legal and self-contained (with its own entrance, kitchen, bathroom, etc.).
- Approved by your municipality (permits required).
- Intended for long-term rental use only – short-term rentals like Airbnb are not allowed.
- Some lenders may require proof that you have a cash fallback (e.g., 25% of the improvement costs in liquid assets) before approving the financing.
Important: Program criteria can vary from lender to lender. Not every lender will have the same requirements, and details may evolve over time.
Why It Matters
- Rental income counts – projected market rent, verified by an appraiser, can help with mortgage qualification.
- Build wealth faster – you’re not only improving your property, you’re creating a lasting income stream.
- Flexibility – you can add up to four legal units in total (including your own), opening doors to multi-generational living or extra cash flow.
- Community impact – every legal suite added expands rental options in your neighbourhood.
Availability
Although CMHC has implemented this option, not every mortgage lender has rolled out their own version of this program yet. Access can still be limited, but the good news is that we do have some lender options available today, and more are expected to follow as the program grows.
Terms at a Glance
- Available on fixed-rate (1–5 years) and adjustable-rate (5 years) mortgages.
- Maximum amortization: up to 30 years with mortgage insurance.
Who Should Consider This?
This program is ideal for homeowners who:
- Have unused or underused space in their property.
- Want to add a legal rental suite to boost long-term income.
- Are open to navigating permits and construction, with financing support.
Example:
Imagine you have a $600,000 home. You spend $80,000 building a legal basement suite. With the improvements, your home could be worth $700,000+. The program allows you to refinance based on that higher “after-renovation” value, making the project financially achievable.
Final Thoughts
The “Refinance Plus Improvements” program is a game-changer for Canadian homeowners. It blends personal financial growth with a real contribution to the housing supply. If you’ve ever dreamed of turning your property into a smart income-producing asset, this could be the opportunity you’ve been waiting for.
Curious if this program could work for your home? Reach out today, and let’s explore your options.
Frequently Asked Questions
Do I need building permits?
Yes. A valid building permit (or municipal equivalent) must be in place before the initial funding is released. At the end of the project, you’ll also need an occupancy certificate to confirm the new suite is legal.
Can I use the new suite for Airbnb or other short-term rentals?
No. This program is exclusively for creating long-term rental units. You’ll need to sign a statutory declaration confirming the unit will not be used for short-term rentals.
How does the rental income help me qualify?
Projected rental income, based on a fair market rent appraisal, can help you qualify for a larger mortgage amount.
Do I need cash savings to qualify?
Some lenders may require that you show a financial cushion, for example, 25% of the improvement costs in liquid assets. This is not a universal requirement and varies by lender.
When do I get the funds for renovations?
Some lenders will advance funds in stages, as your project progresses with the final draw after the suite is complete and confirmed legal. Others will only advance the money when your project is complete.
How much can I borrow?
You can refinance up to 90% of your home’s improved value (after renovations are complete), to a maximum of $2 million
Note: Mortgage insurers support this program, but lender participation varies. Program rules and requirements are subject to change. Always confirm current details with your mortgage professional before starting.
Hi, I’m Jill, your mortgage pro. I am here to make the world of mortgages less confusing so you can feel confident in your financial decisions. Through my blog, I aim to provide you with the knowledge and guidance you need to make informed decisions. Your financial peace of mind is my top priority.
