The Canada Secondary Suite Loan Program, which promised homeowners up to $80,000 at 2% interest, was cancelled in the 2025 federal budget and never opened for applications. If you were waiting for it to build a basement suite in your bungalow, you need another plan. The main options in 2026 are an insured refinance designed for secondary suites, a regular refinance, a home equity line of credit, or cash and savings.
Key takeaways
- The federal $80,000 suite loan is not available.
- An insured refinance can go up to 90% of the home’s as-improved value for suite projects.
- That option requires approval before or very early in construction.
- A HELOC is flexible but carries a variable rate.
- Get permits and financing lined up before you hire a contractor.
What happened to the federal suite loan
The program was announced with a $40,000 limit, later doubled to $80,000, with a fixed 2% rate over 15 years. It was to be run by CMHC. It was wound down before any loans were issued, so there is no application to submit and no waiting list.
Your financing options compared
| Option | How much | Best for | Watch out for |
|---|---|---|---|
| Insured refinance for secondary suites | Up to 90% of as-improved value, home value up to $2 million, up to 30-year amortization | Owners without a lot of existing equity | Must be approved before or very early in construction; insurance premium applies |
| Conventional refinance | Up to 80% of current value | Owners with significant equity | Penalty if you break your term mid-way |
| HELOC | Up to 65% of value on the line | Phased work and flexible draws | Variable rate; requires discipline to repay |
| Savings | Whatever you have | Smaller projects | Keep an emergency fund intact |
The insured refinance, explained
Since January 15, 2025, mortgage insurance rules have allowed homeowners to refinance up to 90% of a property’s value, including the value added by the new suite, to pay for building it. The value limit is $2 million and amortization can run to 30 years. The added units must be self-contained and meet local zoning, and they cannot be used as short-term rentals.
The catch is timing. Insurer approval has to be in place before construction starts or at a very early stage. Owners who hire a contractor first and look for financing second often find they no longer qualify.
What a bungalow basement suite costs
Bungalows are among the easiest homes to convert because the basement is large and often has a side or rear door. Costs still vary widely with ceiling height, the need for a second exit, egress windows, fire separation, plumbing and whether the electrical service needs upgrading. Get at least three written quotes and add a contingency of 10% to 15%.
- Check that ceiling height meets the Building Code before you spend anything on design.
- Budget for permit fees and drawings.
- Ask whether your municipality offers a grant or forgivable loan for new second units. Some do.
Our guides to adding a rental unit to your bungalow and egress windows cover the technical side.
Bungalow tip: Raised bungalows usually make the best suite candidates. Their basements sit higher out of the ground, which means larger windows, better light and easier exits. Read more about raised bungalows.
Tax help that still exists
If the suite is for a senior or an adult relative with a disability, the federal Multigenerational Home Renovation Tax Credit may refund 15% of up to $50,000 in eligible costs, to a maximum of $7,500. It has specific conditions, so check them with an accountant before you build.
The right order of steps
- Confirm zoning allows a second unit on your lot.
- Have a designer assess the basement against the Building Code.
- Talk to a mortgage professional and choose a financing route.
- Get approvals and permits.
- Sign the contractor and start work.
- Pass final inspections, then tell your insurer and find a tenant.
Frequently asked questions
Can I use projected rent to qualify?
Some lenders count a portion of expected rent from a legal suite. Policies differ, so ask early.
Is a legal suite worth the extra cost over an unregistered one?
Yes. A legal suite can be insured, financed and advertised openly, and it adds resale value. An illegal one creates risk for you and your tenant.
Can I buy a bungalow that already has a suite?
Yes, and it avoids construction entirely. Ask for proof that the unit is registered or legal.
Find a bungalow with suite potential
Browse bungalows for sale with a separate entrance to see homes that are already partway there.
This article is general information as of early October 2026, not legal, tax, mortgage or insurance advice. Rules and numbers change, so confirm the details for your situation with a licensed professional.
