Comprehensive Guide to Secondary Housing Support Programs in Canada and Ontario

After hundreds of requests for assistance in obtaining funds for secondary housing construction, we decided to prepare an extended article. In it, we describe in detail the entire process of obtaining financing through the federal secondary housing support program and regional programs in Ontario.

Comprehensive Guide to Secondary Housing Support Programs in Canada and Ontario: Federal and Regional Programs

Creating affordable rental housing is a key task of government policy in Canada and the province of Ontario. To support homeowners willing to create secondary housing units, such as Garden Suites and separate apartments, federal and regional programs have been developed. These programs offer financing in the form of a forgivable loan, which can be canceled if the program conditions are met. It is important to understand that despite the forgiveness, this is borrowed money that may be reclaimed in case of non-compliance with the program conditions.

Loan Terms and Format

Funding under the programs is provided as an interest-free forgivable loan. This means that if you comply with all program conditions, such as renting out the housing at an affordable rental rate and maintaining energy efficiency, you will not have to repay the loan amount. However, if the program conditions are violated (for example, if the rental rate is higher than allowed), the organization that provided the loan may require its return.

Monitoring and Compliance

During the program term, which can range from 10 to 15 years, the organization that issued the funding will conduct inspections. The homeowner must be prepared for the following:

• Annual checks of the rental rate and energy efficiency level to ensure compliance with program conditions.
• The owner is obliged to provide documents confirming the rental of housing at an affordable rate and compliance with energy efficiency standards.
• In case of non-compliance with the conditions, the program may require repayment of the loan.

Federal Secondary Housing Support Program

The federal program provides an interest-free forgivable loan of up to $40,000 for homeowners who create energy-efficient additional housing and are willing to rent it at a reduced rental rate. The main goal of the program is to improve housing affordability across Canada.

Key Conditions of the Federal Program:

• Loan Amount: Up to $40,000.
• Purpose: Covering costs for the construction of secondary housing.
• Loan Forgiveness Conditions: The housing must be rented at an affordable rental rate (usually 80% of the market value) and meet energy efficiency standards.
• Rental Term: From 10 to 15 years, depending on the region.
• Monitoring: Annual inspections, including checks of energy efficiency levels and affordable rental rates.

Step-by-Step Instructions for Participating in the Federal Program

1. Assess Eligibility Requirements: Before applying, check if your project is suitable for participation in the program.
2. Collect Documents: Prepare a project plan, energy efficiency documents, and a declaration of renting the housing at an affordable rate.
3. Complete the Application: Submit the application on the website Canada Mortgage and Housing Corporation (CMHC).
4. Verification and Receipt of Funds: Funds will be paid out in parts as construction stages are completed.
5. Compliance with Program Conditions: Mandatory compliance with rental and energy efficiency conditions; otherwise, the loan may be reclaimed.

Regional Support Programs in Ontario

Each county in Ontario has its own affordable rental housing support programs with different loan amounts and conditions. These programs are designed to support the construction of housing that must be affordable in terms of rental rate and rented out for an established term. Let’s consider the example of Simcoe County, as its program offers clear conditions and has specific loan amounts, but a similar process can be followed in other counties.

Funding Amounts under Ontario Regional Programs: