If you own a home on a good-sized lot, or you've been eyeing a small multi-unit building, the rules for financing that kind of project are about to change. Starting February 1, 2027, new mortgage-insurance options become available for newly built three- and four-unit homes and for buildings with five to 50 units.
Here's what the federal government has published, what it could mean in Durham and Toronto, and a practical checklist you can work through over the winter, so you're ready to talk to a lender when the new products arrive.
What's changing
In Budget 2026 (tabled November 5), the federal government confirmed the mortgage-insurance changes it first announced in the Spring Economic Update. The Department of Finance Canada then published the detailed parameters for lenders and insurers (Finance Canada backgrounder; Budget 2026, Chapter 3).
Newly built three- and four-unit homes
For building or buying a newly built triplex or fourplex, Finance Canada's parameters say insured loans can go up to:
- 90% of the projected value of the property once construction is complete
- No owner-occupancy requirement, so you don't have to live in one of the units
- No maximum property value
- Up to a 30-year amortization
- Standard debt-service limits apply (a maximum gross debt service ratio of 39% and total debt service ratio of 44%, at the minimum qualifying rate), and at least one borrower or guarantor needs a credit score of 600 or higher
These parameters are for new three- and four-unit homes. They don't describe converting or refinancing an existing house.
Buildings with five to 50 units
For properties with 5 to 50 self-contained units on a single title, private mortgage insurers will be allowed to offer insurance, not just CMHC. The parameters include:
- Permitted uses: construction, purchase, refinance and renewal
- Maximum loan to value: 90% for new construction, 85% for other transactions
- Maximum amortization: 50 years for new construction, 40 years for other transactions
- Minimum debt coverage ratio: 1.15 on five-year terms, 1.1 on 10-year terms
- Net worth: at least 25% of the loan amount, with a minimum of $100,000, based on assets held in Canada
- No maximum property value and no owner-occupancy requirement
When it starts
Finance Canada says these products will be available for insurance applications that lenders submit on or after February 1, 2027. Until then, today's rules apply. Each lender and insurer will also set its own underwriting, so the details you're offered may differ from the maximums above.
What's already allowed where you live
Financing is only half the picture. Your property also has to be zoned for what you want to build.
- Ontario-wide: Ontario's More Homes Built Faster Act, 2022 allows up to three residential units on most residential lots with full municipal water and sewer services, without a rezoning, whether in the main house or split with a detached unit such as a garden or laneway suite (Ontario Newsroom backgrounder). Local zoning still sets things like height, setbacks and lot coverage.
- City of Toronto: Toronto permits multiplexes of up to four units in residential neighbourhoods across the city, subject to zoning rules and building permits (City of Toronto, Multiplex Housing).
- Durham Region: each town sets its own rules. A fourth unit, or a full fourplex, usually needs a closer look at the local zoning by-law, and sometimes a minor variance or rezoning. Start with your town's planning department.
A Whitby deadline worth knowing: the Town of Whitby's additional dwelling unit (ADU) incentive, funded by the Housing Accelerator Fund, reimburses select Town fees for eligible ADU projects. To qualify, a complete building permit application has to be in by December 31, 2026, and the Town recommends submitting at least two weeks earlier. The unit must then be registered by March 31, 2027 (Town of Whitby, Additional Dwelling Units). If you've been planning a suite in Whitby, that's a December deadline, not a spring one.
Your plex feasibility checklist
Use the winter to answer these questions before you spend on drawings.
1. The lot
- What's the zoning, and how many units does it allow as of right? (Ask your town's planning department, or submit a planning inquiry.)
- Are there full municipal water and sewer services?
- Lot width, depth and frontage: is there room for a separate entrance, parking if required, and a path to a rear unit?
- Any conservation authority, heritage or easement issues on title?
2. The building
- Are you converting an existing house, adding a detached unit, or knocking down and building new? (The new three- and four-unit insurance parameters are for newly built properties.)
- Will the design meet the Ontario Building Code and fire separation requirements for each unit? Some towns, including Whitby, offer pre-reviewed designs for detached ADUs.
- Can the existing electrical, water and sewer connections handle more units, or will they need upgrades?
3. The numbers
- What would a lender value the finished property at? Ask for an estimate of the completed value early.
- What are the realistic construction costs, contingency and timeline?
- What rents could each unit get, and what will taxes, insurance, utilities and maintenance cost?
- On a 5- to 50-unit building, does the net operating income clear the minimum debt coverage ratio?
4. The people
- A mortgage broker or lender who does multi-unit and construction financing, to tell you what they'll offer after February 1
- A designer or architect who knows your town's zoning
- Your insurer, since adding rental units is a material change to your home insurance
- A lawyer and accountant on structure, title and tax
5. The paperwork
- Building permits for every unit, and registration where your town requires it
- Updated home insurance before tenants move in
- Leases and rent rules under Ontario's Residential Tenancies Act
Thinking about a lot, a plex or a teardown?
Whether you already own a property that might work, or you're looking for one, the first questions are usually about the lot and what it could become. Message or email me at [email protected] and I can pull recent sales of multi-unit and infill properties near you, and help you find lots in Durham or Toronto that are worth a closer look.
Andrew Persaud, Sales Representative, REVEL Realty Inc., Brokerage #200B – 1032 Brock Street S, Whitby, ON L1N 4L8 📞 m 416.220.7045 | o 905.357.1700 ✉️ [email protected] 🌐 https://homesbyandrew.ca/
This post is general information, not financial, legal, tax or mortgage advice. Mortgage-insurance parameters are as published by the Department of Finance Canada and may change; lenders and insurers apply their own criteria, and approval isn't guaranteed. Zoning and permit rules vary by property and municipality, so confirm with your town's planning and building departments. No rental income or property value is promised. Information is believed reliable but not guaranteed. Not intended to solicit buyers or sellers currently under contract with a brokerage.
Sources (checked November 9, 2026)
- Department of Finance Canada, "Mortgage Insurance Rule Changes to Support 'Missing Middle' Housing" (backgrounder, November 2026): https://www.canada.ca/en/department-finance/news/2026/11/mortgage-insurance-rule-changes-to-support-missing-middle-housing.html
- Budget 2026, Chapter 3: https://budget.canada.ca/2026/report-rapport/chap3-en.html
- Canadian Mortgage Trends, "Budget 2026: Ottawa opens 5–50-unit properties to private mortgage insurance" (Nov 5, 2026): https://www.canadianmortgagetrends.com/newsdesk/2026/11/05/budget-2026-ottawa-opens-5-50-unit-properties-to-private-mortgage-insurance/
- Ontario Newsroom, More Homes Built Faster Act, 2022 backgrounder: https://news.ontario.ca/en/backgrounder/1002525/more-homes-built-faster-act-2022
- City of Toronto, Multiplex Housing: https://www.toronto.ca/city-government/planning-development/planning-studies-initiatives/multiplex-housing/
- Town of Whitby, Additional Dwelling Units (incentive deadlines): https://www.whitby.ca/services-and-payments/building-and-renovating/additional-dwelling-units/
