Unlock 90% CMHC Financing for Secondary Suites & ADU's
Secondary suites and ADUs are one of the fastest-growing real estate strategies in Canada — and CMHC has a program that lets you finance them with 90 percent leverage. In this episode, Scott Dillingham explains exactly how the program works, who qualifies, and how investors can u…
Secondary suites and ADUs are one of the fastest-growing real estate strategies in Canada — and CMHC has a program that lets you finance them with 90 percent leverage. In this episode, Scott Dillingham explains exactly how the program works, who qualifies, and how investors can use it to add rental income with minimal upfront capital.
Scott emphasizes practical steps for success, including building in cost cushions for overruns, sourcing competitive contractor quotes, and evaluating lot sizes for compliance. He highlights variations by region—such as Alberta's flexible multi-unit allowances—and cautions against overpaying for builds like tiny homes or modular units. With 30-year amortizations available and options for conventional financing at 80% LTV to skip premiums, this program opens doors for first-time investors. Even in slower markets, adding a self-contained unit can provide steady revenue streams, supporting long-term wealth building amid rising demand for secondary suites.
Tuning into this episode equips you with actionable insights on navigating bylaws, variances for multi-story additions, and faster permitting under new legislation. Scott encourages booking a no-obligation strategy call to explore personalized options, underscoring how ADU financing via CMHC can turn your home into a revenue-generating asset. Ideal for those searching "how to finance a garden suite" or "secondary suite rental income ideas," this discussion blends expert advice with real-world strategies to enhance property value and address Canada's housing affordability challenges.
Key Takeaways
- CMHC Refinance for ADUs: Access up to 90% of your home's completed value on primary residences to fund secondary suites, with a $2 million loan cap—funds strictly for unit additions like garden suites or basement apartments.
- Premiums and Costs: Expect CMHC top-up premiums on the increased loan amount (higher than new premiums but lower overall); opt for bank financing at 80% LTV to avoid fees, while securing a 30-year amortization for better cash flow.
- Regional Flexibility: Ontario supports up to three units without rezoning; areas like Alberta allow more based on lot size—always check local bylaws for "missing middle" housing to maximize rental income potential.
- Smart Building Tips: Get multiple contractor quotes to avoid overpaying; consider cost-effective options like foundation underpinning over backyard builds, and include buffers for material hikes or surprises during demo.
- Investor Mindset: Focus on self-contained units for compliant, rentable spaces; apply for variances if needed for height or layout, and leverage faster approvals under bills like Ontario's Bill 60 for quicker multifamily conversions.
- Next Steps for Success: Book a strategy call to review equity, options, and resources—pair with low-interest loans for comprehensive ADU financing to generate passive income amid housing shortages.
Links to Show References
- LendCity Mortgages (for Strategy Calls and Pre-Approvals): lendcity.ca
- CMHC Secondary Suite Resources: cmhc-schl.gc.ca
- (00:00) - - Introduction to CMHC ADU Refinance: Unlock 90% Financing for Secondary Suites
- (02:43) - - Key Rules: Loan Caps, Usage Restrictions, and Cost Cushions for Builds
- (05:05) - - Premiums Explained: Top-Up Fees vs. New Insurance and Amortization Benefits
- (07:32) - - Contractor Tips: Avoid Overpaying and Explore Underpinning Options
- (09:56) - - Conventional Financing for Rentals: Multi-Unit Strategies and Bylaw Navigation
Transcript
Introduction
Welcome to the Wisdom Lifestyle Money Show. I'm your host, Scott Dillingham. The show is designed to help Canadians invest better in Canada and the United States. We are the North America-based mortgage financing lender and provide education to both countries.
Discover how you can become a better investor and access the financing you need. Welcome back to the Wisdom Lifestyle Money Show.
I'm your host, Scott Dillingham. I have an awesome program that I wanna talk to you guys about.
It's available across Canada. I do think it's best to tap into an expert for the special program because most don't understand how it goes. However, where it is, is it's through the Government of Canada. So on your primary home, you can refinance your home with CMHC.
The Core Idea
You can get up to 90% of your home's value as a new loan as long as you use these funds to add an EDU. So if you listen to this show, you know we're investor-focused. You know we're about cash flow. We talk about multifamily investing, investing in the States, like all kinds of different programs and things.
But this EDU program is absolutely becoming the future. So many people across Canada are now adding more units to their properties. So you consider Ontario, where Doug Ford said every client can put three units or like have an up to a three-unit property and you don't need to apply for rezoning or anything.
So they need more units, okay? Now, different places have different rules and not all municipalities in Ontario are even following that three-property rule, right?
Like a three-unit rule. Some people are saying, no, like we don't support that. Some are going above and beyond and allowing more units.
Deep Dive
Consider Edmonton, Alberta, right? They'll allow you, pending the lot size is correct, but you can do up to eight units there per lot, which is crazy, right?
Like it's incredible. So in Toronto, this is known as the missing middle, right? Adding those extra units to your property. So it's something that's becoming very, very popular.
So it's quite easy to do. So there's a couple of things that you need to know.
So they do have a $2 million cap. So you want to keep that in mind too, right? Because if you are where, you know, luxury home prices are in that range, right?
Practical Steps
It's not going to work. So we have to keep that in mind. Secondly, they don't allow you to refinance, to have cash in the bank or to pay bills and stuff like that. It's only to add extra units.
So I cost just everybody, whenever they're doing like a mortgage plus improvements or renovating, I always encourage everybody to increase the quotes slightly for cost overruns or, you know, say, you know, you've priced it with materials at a certain price, but then materials go up or you start demo and then you realize there's extra problems that you didn't know before, right? So you always want to have a little bit of a cushion. So, you know, theoretically, if you do that, there could be a small cushion, you know, left over for you to have extra.
But I would like me, I would just pay that down to the loan if that was the case. But that's up to you guys. But so anyways, the funds have to be used to add a unit. Oh, a couple of things here.
So they're going to lend the 90% on its completed value. So that's really, really great to know because obviously you haven't started the property yet and you might not have the equity in your home today, right? But if we're adding a secondary unit, there could be the equity there, right? So we can make this work even if you don't have the equity in your home to do it.
Key Takeaways
So that's great. So that's one of the programs is we could tap into CMHC.
We do a refinance. I don't know if you recall when you first purchased your home and you went with CMHC, you had a CMHC fee where they actually charge you a fee. This program has that fee as well. So the fee is built into the loan amount.
So keep that in mind, right? There's a cost to using CMHC. The premiums are going to be higher. It's going to be a top up, especially if you already have the loan insured with CMHC, right?
The CMHC fee that you've paid on your loan amount, you won't have to pay, but the top up to get from your original loan amount to where you need to be to add this ADU, there's a top up premium and the top up premiums are much higher than brand new premiums, but it will save you as opposed to getting a brand new premium on the whole balance because you're only paying on the top up, right? So you want to keep that in mind too. So that's one of the programs with CMHC.
Resources
We can actually do the same program with a few of the banks and different lenders we have access to, but they're going to do it at 80% of the completed value, not the 90% like CMHC, but you can avoid the CMHC premiums if we go up to the 80%, but if we're going to go to 90%, obviously there is a CMHC premium. In both cases, getting the 30-year amortization is no problem. So that's great because usually for insured properties, if you're not a first-time home buyer or you're not doing a new construction property, you're tapped at 25-year amortization.
So now you can get to 30%, which is ideal. So what I encourage everybody here who's listening to this to do is book a call. There's going to be a link in the show's description. Chat with an expert on my team.
We always offer, it's just something that we do, sort of a strategy call for every investor or client just to know your options. There's no obligations or anything.
We present the options. If you like what you hear, you move forward.
Introduction
If you don't, you don't. But I encourage you to book that call just so you can hear what's possible and look into this. But it is something that's important. We do have a housing shortage overall.
I'm recording this at the end of 2025. And obviously, the economy is a little bit weird. The housing market slowed down a bit.
Things are slower than normal. People are on the sidelines due to rate tariffs. But the good news is rates seem to be coming down. So we'll have to see how long the slowdown lasts.
However, even with that being said, right, if money's tight and things are more challenging, having that extra rental income can absolutely help your family out. these units, depending on who you partner with.
The Core Idea
And we have experts locally. We have experts in Alberta. And we can work with you on these EDUs and connect you with people to help build, you know, providing your tapping into us for the financing. We can share all these resources in our Rolodex with you so you can get started on the right foot.
But I do want to caution you that I have seen some people, whether it's a tiny home, ADU, Lanely, you know, Garden Suite, there's all these different names for it. But I've seen drastically different prices for a building by itself. You know, that's, you know, counts under this EDU program.
The prices differ widely. So you don't want to overpay is what I'm trying to say. So get a couple quotes, reach out, we can help you to source, you know, a good contractor for you. Obviously, we can't say, oh, this is an amazing contractor, but we see the pricing, right?
We see the pricing and we can say, hey, give this guy a call. Obviously, it's up to you who you hire, but be cautious of that. And then secondly, right, like, look at your layout, look at your floor plan. You don't necessarily have to add a unit in your backyard.
Deep Dive
We have some, some clients that are underpinning, right? So they're, they're pitting their foundation, they're raising it, right?
So they're digging deeper. So they're making their foundation deeper and they're adding a unit in the basement, literally as we speak. And that was cheaper for them than having somebody put one in the backyard. And actually, to be honest, you know, I know they got put it for that, but I don't think they could have due to sizing, um, had, you know, one in their backyard, um, but it still came in cheaper to literally raise the house and then finish their basement.
They had a side entrance, they're adding a second entrance. Um, now they're going to have egress windows, right?
Because of the proper height. So there's all these different things that you can do. Um, it's just tapping into these, these programs, but the one with CMHC is specifically on your primary home. If we're going conventional, we can look at doing this.
Practical Steps
So conventional is 20% down, low CMHC. We can look at doing this on your existing rentals. Uh, again, we have to follow the local municipalities guidelines. We have to see how many units they do support per property and there's different steps involved in that.
A lot of the contractors that build these properties, they can tell by looking at your lot size and the placement of your current house. Quite often, these units can be added as long as it doesn't take up a certain square footage of your, your lot size, like your percentage of land is under X amount or over X amount, right?
Then they can move forward. So sometimes they'll build these units. I've, I've been in some, I've got some pictures where, um, it was two stories, but you got to watch two because if your home is a single story to build a second story EDU, right? To meet the square footage requirements, they may not allow you to do that because your primary building is shorter.
So you have to apply for an exception. Every municipality will call it something different.
Key Takeaways
Locally, it's called a variance. You have to apply for a variance. So that allows you to apply and if they approve you, then you can make a two story even if your house is one kind of, do you know what I mean? So there's, there's, they're getting flexible, they're getting creative and with some of the new policies coming out, um, right, like Bill 60, the, the bill for landlords that helps, you know, create more even ground, especially in Ontario, um, well, specifically Ontario, the, um, they're also enacting, you know, faster build processes, easier approvals for permits.
So that will help for these additional units to be completed much faster. So anyways, I hope this episode added value and showed you a program that you were not aware that you could tap into. Could call a someone on my team and we will help guide you through all of this and then, um, yeah, we'll go from there but greatly appreciate you. If you liked this episode, please share it and like it, uh, it means a lot to us.
Thank you so much. Thank you so much for tuning into the show today. If you found value, please follow the show and rate it five stars. It would mean the world to me.
And lastly, all the resources that we spoke about are at the bottom of the show notes. Looking forward to seeing you on the next episode.
