ARU Funding in Ontario: What Actually Exists in 2026

A lot of people have heard about a federal loan. Eighty thousand dollars at two percent interest, to build a second unit on your property. Some have planned around it.

That loan never happened.

It was announced, it was budgeted for, and then it was set aside in the 2025 federal budget without an application portal ever opening. Dozens of websites still describe it as though it launches next month.

I am starting there because the gap between what gets announced and what actually exists is exactly where people lose time and money.

So let us talk only about what is real today.

First, the rules that were taken away

The biggest change was not money. It was permission.

Bill 23, in November 2022, made up to three residential units allowed on most serviced residential lots inside urban settlement areas. This is provincial law and it sits above local zoning. It also removed three things at once: development charges, which municipalities can no longer charge for a second or third unit in the main house or for one unit in a detached building, and on an ordinary lot that alone is a five figure difference; minimum unit size, since a municipality can no longer tell you your unit has to be a certain number of square metres; and parking, since no more than one space can be required for these units.

Then, in November 2024, the province went further. Ontario Regulation 462/24 set standards that now override municipal by-laws on parcels of urban residential land in five specific areas: lot coverage of up to 45 percent is permitted, there is no floor space index limit, minimum lot area defaults to the base zone, a four metre separation between buildings applies unless the local by-law is more generous, and the angular plane rules that used to block these projects no longer apply the same way.

That second change is the one almost nobody has heard about, and it is more recent and more specific than Bill 23.

None of this means every lot qualifies. Conditions vary and I come back to that at the end. But the framework really has moved.

Second, the money that is actually there

The County of Simcoe forgivable loan

The County of Simcoe runs a Secondary Suites Program offering up to $50,000 as a loan that is forgiven over fifteen years. If the conditions are met, nothing is repaid.

There is also a separate grant of up to $5,000 for permanent accessibility work in the new unit. Ramps, bath lifts, counter heights, doorbell and alarm cues, bathroom modifications. If the person moving in is an aging parent, this one is worth knowing about.

The published eligibility is plain enough to state here. The property has to be in Simcoe County, property taxes, insurance and the mortgage all have to be current, and the applicant has to be a Canadian citizen, a permanent resident, or hold refugee claimant status. There is no application fee, and it covers both legalizing a suite that already exists and building a new one, garden suite included.

That is real money, and a lot of owners in this area have no idea the program exists.

It also comes with conditions. Real ones, that run for fifteen years and that decide whether this route suits your situation or works against it. Opening those up here would take over the article, and they deserve a proper explanation rather than a bullet point.

If you want to know whether your property and your plans fit the program, you can email me and ask.

Financing through your lender

This is what took the place of that cancelled federal loan, and it is the piece most homeowners have not caught up with.

Since 15 January 2025, owners have been able to refinance an insured mortgage up to 90 percent of the property's value, provided the money goes toward building a legal, self contained unit. The calculation is based on the value of the property after the work is done, not before. Part of the value you are creating counts toward what you can borrow to create it.

The as improved property value has to stay under two million dollars, and the amortization can run up to thirty years.

One condition that rarely gets mentioned: the unit cannot be used as a short term rental. The rule is written as a minimum tenancy of ninety consecutive days.

A tax credit, in specific circumstances only

There is also a federal tax credit: the Multigenerational Home Renovation Tax Credit. It is worth up to $7,000 in 2026. The credit rate is tied to the lowest federal tax bracket, which has been falling, so the number keeps moving: it was $7,500 when the credit launched in 2023, dropped to $7,250 for 2025, and settles at $7,000 for 2026 onward.

It is narrow. It applies where the person moving in is a senior or qualifies under the disability tax credit, and not otherwise. Worth knowing about. Not worth planning around unless you already know it applies to you.

And two routes that do not combine

Here is something that rarely gets said plainly.

Some of these programs give you money and, in exchange, put limits on how you rent the unit and what you can charge, for many years. Others place no such limits, but they are financing rather than assistance.

Which one fits depends on what you are trying to do. If you want the $50,000 forgiven, that money comes with fifteen years of conditions on how the unit gets used. If you want to keep full control over rent and tenant, the refinancing route gives you that, but you are paying it back with interest like any other mortgage. There is no version of this that gives you both at once.

None of this tells you whether your own lot qualifies for any of it. That depends on the parcel, the by-law that applies to it, and what the municipality's services can support where you live. That is what the free feasibility check on this site is for.

A few direct answers

Is the $80,000 federal secondary suite loan still available?

No. It was announced, budgeted, and then set aside in the 2025 federal budget. No application portal ever opened.

How much is the County of Simcoe forgivable loan?

Up to $50,000, forgiven over fifteen years, for creating or legalizing a secondary or garden suite. A separate grant of up to $5,000 is available for accessibility work built into the new unit.

Can I use refinancing to build a garden suite?

Since January 15, 2025, yes. Insured refinancing up to 90 percent of the as-improved property value, capped at two million dollars, amortized up to thirty years. The unit cannot be used as a short-term rental; the minimum tenancy is ninety consecutive days.

Does the province override my municipal zoning by-law?

In part, and only in serviced urban areas. Bill 23 and Ontario Regulation 462/24 set standards that sit above local zoning inside settlement areas with full municipal water and sewage service. They do not extend to rural New Tecumseth, or to any lot on a private well and septic system, and they do not override lot dimensions, servicing capacity, or conservation authority regulation.

Can you tell me if my lot qualifies?

Not from the provincial rules alone. It depends on the parcel, the by-law, and whether the municipality's services reach it. That is what the free feasibility check is for.

Sources

County of Simcoe, Secondary Suites Program, 2025 to 2026. CMHC, Refinance for Building Secondary Suites. Government of Ontario, Ontario Regulation 462/24, Additional Residential Units, and the related notice on the Environmental Registry of Ontario. Canada Revenue Agency, Multigenerational Home Renovation Tax Credit. Department of Finance Canada, 2024 Fall Economic Statement and the May 2025 announcement on the federal tax cut.

Last updated: September 5, 2026. Ben H., Simcoe Garden Suites, Alliston.

This is a description of current practice, not legal advice.