Maximize Property Potential with CMHC Refinance for Secondary Suites

Refinancing your home can be a powerful way to unlock its potential while contributing to gentle community densification. The CMHC Refinance program allows homeowners to create self-contained secondary suites through insured financing. Here's a concise guide on how this program works and its key requirements.

Program Highlights

• Purpose: Access insured financing to fund the construction of self-contained secondary suites.

• Focus: Designed specifically for project-related costs, not for general equity take-out.

• Community Impact: Supports gentle densification and enhances the value of properties.

Borrower Requirements

• Borrowers must own the home.

• At least one unit must be occupied by the borrower or a close relative (on a rent-free basis).

• Borrowers must be Canadian citizens, permanent residents, or non-permanent residents authorized to work in Canada.

• Minimum credit score: 600.

Property Standards

• Secondary suites must:

  • Be self-contained.

  • Comply with all applicable bylaws and regulations.

  • Be excluded from short-term rental use.

• Property must be in Canada, suitable for year-round occupancy, and accessible year-round (e.g., via ferry or vehicular bridge if on an island).

Financing Details

• Loan-to-Value (LTV) Ratio: Up to 90% for owner-occupied properties with up to 4 units (including existing units).

• Maximum Lending Value: $2,000,000 (as-improved property value).

• Amortization Options:

  • Maintain the existing CMHC loan schedule.

  • Blend with new financing using a weighted average.

  • Reset amortization (treated as a prior uninsured loan).

Key Documentation

• Improvement lists and cost estimates/quotes.

• Building plans and permits.

• Occupancy permits or third-party verification from a qualified professional.

Determining Property Value

• Dual Assessment:

  • As-Is Value: Current market value.

  • As-Improved Value: Market value after improvements.

• Lending value: Lesser of as-is value plus improvements or as-improved value.

Debt Service Ratios

• Gross Debt Service (GDS): Maximum 39%.

• Total Debt Service (TDS): Maximum 44%.

• Interest rates used for calculations: The greater of the contract rate + 2% or 5.25%.

Advancing Options

• Full Service: CMHC validates up to four advances at no cost.

• Basic Service: Lender validates advances without pre-approval from CMHC.

By meeting these requirements and leveraging CMHC’s program, homeowners can create secondary suites that add value to their property and enhance housing availability in their community. If you’re considering refinancing, ensure you gather all necessary documentation and consult your lender early in the process to align your goals with CMHC’s guidelines.

At EvaLanes.com, we’re here to simplify the journey of creating your secondary suite. As outlined above, CMHC Refinance opens the door to exciting opportunities, and we’re ready to guide you every step of the way. From connecting you with trusted mortgage brokers to navigate financing, to delivering the best design and build services that comply with all requirements, we ensure a seamless and stress-free experience. Let us help you turn your property’s potential into a beautifully crafted reality. Contact us today at Hello@EvaLanes.com to take the first step!

For the complete information, please visit: https://www.cmhc-schl.gc.ca/professionals/project-funding-and-mortgage-financing/mortgage-loan-insurance/mortgage-loan-insurance-homeownership-programs/refinance