25 Sep Basement Renovations: A Guide to Financing Before You Start

A basement renovation can start with a simple idea: more living space, a rental suite, a better family room and turn into a much larger financial decision once structural work, waterproofing, permits, and finishing are added to the plan.

In Toronto, a full 800 to 1,000 square foot basement renovation can reach $80,000 to $150,000 or more, especially when underpinning or other structural work is involved. Finishing alone, in a basement that’s already at proper height and waterproofed, may fall closer to $50,000 to $100,000.

For many homeowners, the challenge isn’t deciding whether the basement is worth improving. It’s figuring out how to fund the entire project without draining savings or creating a financing gap halfway through construction.

HELOCs, renovation loans, contractor financing, and CMHC refinancing can all play a role depending on the project and your financial situation.

Start With the Real Cost of the Basement Renovation

Before comparing financing options, it helps to know what you’re actually financing.

A finish-only renovation is very different from a basement that needs underpinning, waterproofing, electrical work, plumbing, framing, flooring, and a full interior build-out. Underpinning alone can represent a large part of the budget before any finishing work begins.

Our basement renovation cost breakdown explains the main factors that affect the overall price.

The important part is to look at the project as one complete scope. Structural work normally happens first and finishing comes later, but both need to fit within the same financial plan.

That gives you a much clearer borrowing target before you start comparing lenders or financing programs.

Using a HELOC for a Basement Renovation

A Home Equity Line of Credit (HELOC) lets you borrow against the equity you’ve built in your home and access funds as they’re needed.

That flexibility can work well for basement renovations because contractor payments often happen in stages rather than all at once.

Since a HELOC is secured against your property, borrowing costs are typically lower than with an unsecured personal loan, and you generally pay interest only on the amount you’ve actually used.

The trade-off is that your home is being used as security. How much you can access depends on factors such as available equity, your mortgage balance, income, and lender requirements.

For a phased project, the main advantage is flexibility: you can draw funds as the work progresses instead of borrowing the full renovation budget on day one.

Renovation Loans and Personal Loans

If a HELOC isn’t available or doesn’t cover the full project, a renovation loan or personal loan may be another option.

These loans are commonly unsecured, so they don’t necessarily require additional home equity. That can make them more practical in some situations, although borrowing costs may be higher than financing secured against the property.

A renovation-specific loan may also have different terms from a general personal loan depending on the lender.

When comparing offers, look beyond the monthly payment. The total cost of borrowing, repayment period, and amount available matter just as much.

CMHC Refinance for a Legal Secondary Suite

If your renovation includes creating a legal secondary suite, CMHC has a refinance option designed for eligible homeowners adding this type of space.

For qualifying owner-occupied properties, CMHC Refinance can provide financing of up to 90% loan-to-value, based partly on the property’s value after the planned improvements.

The maximum lending value or as-improved property value must be below $2 million, and the maximum amortization period is 30 years.

That matters because the financing can take the value created by the renovation into account rather than looking only at what the property is worth before the work starts.

What the CMHC Application Involves

The secondary suite needs to be self-contained and comply with applicable municipal bylaws and regulations.

The application can also involve documentation such as:

• building plans;
• improvement lists;
• contractor estimates or quotes;
• a building permit;
• documentation confirming compliance once construction is complete.

CMHC also states that insured financing should be approved before construction begins or at an early stage of the project.

If you’re considering this route, financing and renovation planning need to happen together rather than treating the loan as something to arrange after the basement is already under construction.

If you’re planning a basement suite, our walkout basement bedroom guide covers considerations such as ceiling height, egress, and layout that can also shape the renovation.

The $80,000 Secondary Suite Loan That Never Launched

This is one area where a lot of older information online is now misleading.

The federal government previously announced the Canada Secondary Suite Loan Program, which was expected to provide loans of up to $80,000.

The program never became operational, and Budget 2025 later confirmed that it would not be implemented.

The CMHC refinance option above is a separate program and is the relevant federal financing measure to look at for eligible secondary-suite projects.

Because eligibility and lending policies can change, it’s still worth confirming the current requirements directly with CMHC or a mortgage professional before building your renovation budget around the program.

Contractor Financing Through VMB Group

VMB Group also offers financing options for basement renovation clients who prefer to spread the cost of the project over time.

Because VMB has been working on basement, underpinning, and structural projects across Toronto for more than 20 years, the financing conversation can happen alongside the project assessment rather than separately from the renovation itself.

That matters on larger basement projects, where the scope may include both structural work and complete finishing.

The exact financing available depends on the project and the terms offered at the time, so it’s something to discuss during the estimate rather than assume will follow a fixed rate or standard package.

It can then be compared alongside a HELOC, renovation loan, or personal loan based on total cost, repayment terms, and how well it fits the construction schedule.

Comparing Basement Renovation Financing Options

There isn’t one financing method that fits every Toronto homeowner.

A HELOC can offer flexibility when sufficient home equity is available. A renovation or personal loan may make more sense when borrowing against the property isn’t practical. CMHC Refinance has a much more specific purpose and applies to eligible secondary-suite projects. Contractor financing gives you another option to compare.

The useful questions are less about which option is “best” and more about:

• how much you actually need to borrow;
• when the funds become available;
• the total cost of borrowing;
• the repayment period;
• whether the financing covers the complete renovation.

Once the project scope is clear, those comparisons become much easier.

Plan the Financing Around the Full Project

A basement that needs underpinning to achieve proper ceiling height and then requires complete interior finishing has several major cost categories.

Structural work, waterproofing, electrical work, plumbing, framing, finishes, and secondary-suite requirements may all be part of the same renovation.

That’s why it helps to price the full scope before arranging financing rather than treating each construction phase as a separate financial decision.

For homeowners, that usually means fewer surprises and a clearer sense of what the finished project will actually require.

Ready to Find Out What Your Basement Renovation Will Cost?

Financing decisions are easier when they’re based on an actual renovation estimate instead of a rough number.

VMB Group has more than 20 years of experience with basement renovation, underpinning, and structural work in Toronto, allowing the team to assess both the structural and finishing requirements before providing a project estimate.

Request a free estimate and ask about the financing options available for your basement renovation.

Basement Renovation Financing FAQs

Is the $80,000 CMHC Secondary Suite Loan Available?

No. The proposed Canada Secondary Suite Loan Program never opened for applications and was later cancelled. The separate CMHC refinance program for eligible secondary suites is the option currently worth reviewing.

Can I Use a HELOC and a Personal Loan Together?

Potentially. Some homeowners combine financing sources when one option doesn’t cover the entire project, but the total borrowing cost and repayment terms should be compared carefully.

Should I Get a Renovation Quote Before Applying for Financing?

Usually, yes. A detailed estimate gives you a much more realistic borrowing target, especially when the project includes both structural work and finishing.

Does Financing Affect the Permit Process?

Usually not directly. The main exception is CMHC refinancing for secondary suites, where plans, estimates, and a building permit can form part of the financing documentation.

Is Contractor Financing Better Than a Bank Loan?

It depends on the terms available to you. Compare total borrowing cost, repayment period, amount available, and how the financing fits your construction schedule rather than looking only at approval speed.