New Federal Program Empowers Ontario Homeowners to Add Rental Suites and Boost Income

Article by Cripps Realty

The federal government is launching a new mortgage refinancing program in January 2025 for homeowners in Ontario and across Canada. This initiative will help create additional living spaces, like basement apartments or converted garages, to address the housing shortage and provide financial relief from rising mortgage costs.

Key Program Details:

• Eligibility: Homeowners must already reside in their property or have a close relative living in one of the existing units. The goal is to create new rental spaces, which could include basement suites or laneway homes.
• Refinancing Option: Homeowners can access insured refinancing to fund the creation of these new units.
• Unit Requirements: All new units must be self-contained and comply with local zoning laws. Short-term rentals, such as Airbnb, are not eligible under this program.
• Number of Units: Up to four units, including the homeowner’s existing home, can be on the property.
• Property Value Cap: The value of the property “as improved” must not exceed $2 million.
• Loan-to-Value (LTV) Ratio: Refinancing can cover up to 90% of the property’s value, including the newly created units.
• Amortization Period: Homeowners can spread their payments over a maximum of 30 years.
• Project Costs: Financing cannot exceed the total cost of the renovation or conversion project.

This initiative comes at a time when Ontario is facing record-high home prices and tight rental markets.

For homeowners considering adding rental units, this program may provide a financial solution that not only helps cover mortgage payments but also contributes to alleviating the rental housing crisis.