Straight answers
How do people pay for a granny pod?
Most families pay for it with the house it sits behind. In Canada, CMHC-insured refinancing lets a homeowner borrow up to 90% of the property's value including the value the new suite adds, as long as that as-improved value is below $2 million, the property holds no more than four units, the money goes only to building the suite, and you or a close relative occupy one of the existing units. Amortization can run to 30 years, and the rule has applied to insurance applications since 15 January 2025. In the US there is no single equivalent to point to, so the route depends on how the unit is classified: a modular on a permanent foundation follows the mortgage path, and a unit on wheels finances through chattel or RV lending.
Figures verified against the sources below · September 14, 2026
01 — The longer answer
The ways a backyard suite actually gets funded
In Canada: refinancing the house to build the suite
The program is CMHC Refinance for secondary suites, and it runs through your lender and the mortgage insurer rather than as a grant. The ceiling is 90% loan-to-value counted against the as-improved value, meaning the property's value once the suite exists, together with any other loans already secured against it. Because the extra borrowing may only fund construction and completion, it is not a way to take equity out for anything else. A suite that is ever rented cannot be rented for less than 90 consecutive days. The Department of Finance names laneway homes among the suites it was written for.
A parent in the suite fits the occupancy rule
The occupancy condition is about the property, not the new building. One of the existing units has to be occupied by the borrower or by a person related to them by marriage, common-law partnership or a legal parent-child relationship, and a relative counts only when living there rent-free. So the arrangement this category is named for, an owner in the main house with a parent moving into the backyard, sits inside the program as written. The same unit can later house an adult child or a long-term tenant without changing what it is.
The suite has to become part of the property
A refinance is secured by the land and what is permanently attached to it, so what it pays for has to be real property. A modular suite built to CSA A277 and set on a permanent foundation is. A tiny home on wheels is not: it stays personal property, the way an RV does, and finances through chattel or RV-style lending on shorter terms and higher rates. That difference is decided by the certification pathway and the foundation, and it is worth settling before choosing a unit.
In the US: the classification decides the loan
American families lean on the same asset, the equity in the main house, but the loan product is a lender decision rather than one national program. A modular unit carrying your state's program insignia and set on a permanent foundation is real property and follows the conventional mortgage path. A unit on wheels is personal property, and NOAH certification is what US lenders and insurers recognize on that route. Check zoning before either: a state accessory dwelling unit mandate obliges a city to permit a dwelling, and Montana's statute says plainly that it does not by itself legalize permanent occupancy of a tiny house on wheels.
Do not budget on rent the suite has not earned
A suite that houses a parent rent-free produces no rent, and whether a lender will count income from a suite that is not built yet depends on the program and the lender. If the plan only works with that income, get the lender's answer in writing before a deposit rather than after.
Whichever way the money arrives, the protection is a payment schedule that releases money only against finished work. Refinance advances are released in stages as construction progresses, which is why ours runs in milestones. We are a builder, not a lender, so confirm the program terms and your eligibility with your own lender.
03 — Sources
Each figure above links to the authority it came from.
CMHC Refinance for building secondary suites: up to 90% loan-to-value on properties of up to 4 units including the existing unit(s); as-improved property value below $2,000,000; maximum amortization 30 years; at least one unit occupied by the borrower or by a person related to the borrower by marriage, common-law partnership or legal parent-child relationship on a rent-free basis; additional financing used only for construction and completion, with no equity take-out; the suite must not be rented for any period under 90 consecutive days
cmhc-schl.gc.caDepartment of Finance Canada, mortgage insurance rule changes to enable homeowners to add secondary suites: up to 90% of the property value including the value added by the suite, in combination with other loans secured by the property; as-improved value under $2 million; up to four units; the borrower or a close relative occupying one of the current units; available for insurance applications lenders submit on or after 15 January 2025; laneway homes named among eligible suites
canada.caMontana SB 528, MCA 76-2-345: municipalities must allow at least one accessory dwelling unit on single-family lots
archive.legmt.gov
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