The short answer: yes, usually — but for different reasons than in 2023, and you need to check three things that changed. Suites are now permitted in most residential zones province-wide, so zoning is rarely the blocker it used to be. The provincial Secondary Suite Incentive Program (the $40,000 forgivable loan) stopped accepting applications in March 2025 — plenty of budgets still have it in them, wrongly. The federal Canada Secondary Suite Loan Program ($80,000 at 2%) never launched: Budget 2025 cancelled it before it opened. What does exist is CMHC Refinance, which lets an owner-occupier borrow up to 90% of the home's value to build a suite, over up to 30 years, at ordinary insured-mortgage rates. It's a mortgage-helper tool, not a pure-investor tool. Rent growth on a sitting tenant is capped at 2.3% for 2026 and 2.2% for 2027. Run the arithmetic on your own quotes before you fall in love with the idea. Not financial or legal advice — confirm current rules with your city, a broker, and BC Housing.
Corrected 6 October 2026. The first version of this post presented the Canada Secondary Suite Loan Program as available and built its levered example on a 2% loan. That program was cancelled in Budget 2025, in November 2025, before it ever took applications, so it was already gone when this was written. The example below now uses the financing that does exist, with the Bank of Canada's average mortgage rates and CMHC's published premium schedule. The suite still pays on these numbers; the reason is different.
Ask almost anyone starting out in BC Interior real estate and you'll hear the same idea: buy the house, put a suite in the basement, let the tenant carry most of the mortgage. It's the most common entry strategy in the province for good reason — it's the cheapest way to turn one property into two income streams without buying a second property.
What's changed is that the rules around it moved substantially between 2023 and 2026, mostly in ways that are good for you, and two ways that are not. Here's how I'd underwrite one today.
What changed, in order of how much it matters
1. Zoning mostly stopped being the problem. Provincial legislation now requires municipalities across BC to permit secondary suites and accessory dwelling units in most residential zones, and larger municipalities to allow small-scale multi-unit housing on many single-family lots. In practice this means the question shifted from "am I allowed?" to "what will the building department require?" — and the second question is a cost question, not a permission question. That's a real improvement. It doesn't mean anything goes: your specific lot, servicing, and parking still govern, so the first call is still to your city's planning counter.
2. The provincial $40,000 forgivable loan is closed. The Secondary Suite Incentive Program — up to 50% of renovation costs to a maximum of $40,000, forgiven at 20% a year — stopped accepting applications on 30 March 2025. It still turns up in suite budgets as though it's live. If you built your numbers around it, rebuild them. This is the single most common stale assumption in suite planning right now.
3. The cheap federal loan never arrived. The Canada Secondary Suite Loan Program was announced as up to $80,000 at 2% over 15 years. Budget 2025 said the program, "which is not yet operational, will not be implemented". If you've seen it in a suite plan, take it out.
What does exist is CMHC Refinance. If you own the home and you (or a close relative, living there rent-free) live in one of the units, it lets you refinance up to 90% of the home's value after the suite is built, as long as that value is under $2 million, with amortisation up to 30 years. The money can only go to the suite; you can't take extra equity out. You still qualify at the stress-test rate (the greater of your contract rate plus 2%, or 5.25%). The suite can't be a short-term rental. It's built for the owner-occupier adding a mortgage helper, not for the investor adding a suite to a rental they don't live in.
4. Rent increases on a sitting tenant are capped at 2.3% for 2026 — and at 2.2% for 2027, announced in August 2026. The annual cap applies to most residential tenancies, suites included. Two consequences for underwriting: don't model 5% annual rent growth on an existing tenancy, and get the initial rent right, because that's the number you'll be living with — the cap resets to market only on turnover, and a tenant who stays six years is otherwise a gift.
5. You can't rescue the numbers with Airbnb. Under the provincial short-term rental rules, short-term rentals in regulated communities are limited to the host's principal residence plus, optionally, one secondary suite or accessory unit on the same property. A suite in a property you don't live in doesn't qualify. If a deal only works on nightly-rate assumptions, it doesn't work.
The arithmetic
Here's the frame I use. The numbers below are illustrative placeholders — substitute your own quotes and local rents, because the whole exercise is worthless with someone else's inputs. For actual BC Interior rent research, the Kamloops rental market guide covers where the numbers come from.
Assume: all-in build cost $75,000 (permits, design, framing, plumbing, electrical, egress, finishes, and a 15% contingency). Suite rents for $1,500/month. Incremental operating cost of the suite — added utilities, insurance, maintenance reserve, and a vacancy allowance — call it $300/month.
Unlevered return on the build:
- Gross rent: $1,500 × 12 = $18,000/year
- Less incremental costs: $300 × 12 = $3,600/year
- Net operating income from the suite: $14,400/year
- Return on cost: $14,400 ÷ $75,000 = 19.2%
That's the number that makes suites so popular. You won't find a cap rate like that buying a whole building — because you're not buying an asset at market price, you're manufacturing one at cost.
Levered, adding the full $75,000 to the mortgage. Two versions, using the Bank of Canada's averages for new 5-year fixed mortgages in June 2026:
Owner-occupier, CMHC Refinance. Say the house is worth $660,000 as it stands, with $500,000 owing. Adding $75,000 takes the loan to $575,000 against a value of $735,000 once the suite is in, about 78%, assuming the appraiser agrees the suite adds at least what it cost. CMHC charges the smaller of 2.40% on the whole loan ($13,800) or 6.05% on the increase ($4,538), so about $4,500 gets added to the mortgage. (A 30-year amortisation adds a 0.20% surcharge on top.)
- Payment on about $79,500 at 4.01% (the insured average) over 30 years: roughly $379/month
- Cash flow: $1,500 − $379 − $300 = about $821/month positive
Investor, no one living there. CMHC Refinance doesn't apply, so you're refinancing conventionally and need to stay at or under 80% of the value.
- Payment on $75,000 at 4.35% (the uninsured average) over 25 years: roughly $409/month
- Cash flow: $1,500 − $409 − $300 = about $791/month positive
Those payments are lower than a 2% loan over 15 years would have been ($483), because the money is spread over 25 or 30 years instead of 15. The trade is more interest overall and a balance that comes down more slowly. Still, roughly $9,500–$9,900 a year of cash flow on little out of pocket, with a tenant paying down the loan. That's the honest reason this strategy dominates in BC, and why I'd rather see a new investor do this well than chase a marginal duplex.
For a sense of whether $1,500 is realistic: CMHC's October 2025 survey put the average purpose-built one-bedroom in Kamloops at $1,347 and the two-bedroom at $1,679. Basement suites aren't in that survey, so use it as a sanity check, not a comparable.
Then the part everyone forgets: the suite also changes what the property is worth and what a lender will do with it. Most lenders will use only a portion of suite income when you qualify — the range varies by lender and whether the suite is legal and permitted — and an unpermitted suite may be treated as worth nothing at all for both appraisal and qualifying purposes. That gap between "generates rent" and "counts as income" is decided by whether you did it legally. It's the strongest financial argument for permits, quite separate from the risk of an order to remove the unit. If you're not clear on how lenders treat this, how much you can borrow for a rental and the stress test post are the background.
The four things that blow the budget up
Almost every suite project that goes badly over goes over on one of these. Get quotes on all four before you commit to a purchase price:
Egress and windows. Bedrooms need compliant egress. In a basement that often means cutting a window well into concrete — excavation, structural lintel, drainage. Straightforward work, easily five figures, and routinely missing from optimistic estimates.
Ceiling height. Older BC Interior housing stock has basements that don't meet minimum height. If the fix is lowering the floor, you're into underpinning territory and the project economics usually collapse. Measure before you offer. This is the one that kills deals outright.
Fire separation and sound. Separation between units, protected exits, interconnected alarms. Predictable and quotable, but it means opening ceilings you may have hoped to leave alone.
Parking and servicing. Your city may require an additional parking space, and older properties sometimes need an electrical service upgrade or separate metering to carry a second kitchen. Both are municipal-specific and both are why the planning counter is the first call, not the last.
Add a contingency on top — 15% is a sensible floor for anything opening walls in a house built before 1990.
When a suite doesn't pay
Being honest about the cases where I'd walk:
- Strata property. Bylaws typically prohibit it outright, and you don't get to out-argue a bylaw. Strata vs freehold for BC investors covers the wider version of this.
- Ceiling height that requires underpinning. As above.
- When the rent doesn't clear the cost. In smaller markets the build cost is similar to Kamloops but the achievable rent isn't. Run it town by town — this is exactly the trap described in comparing Kamloops and Merritt.
- When you need the money back soon. Suite capital is illiquid. You get it back as monthly cash flow and as value on sale, not on demand.
- When you don't want to be a landlord to someone sharing your walls. Not a spreadsheet objection, but a real one, and worth admitting before you spend $75,000 discovering it.
How I'd sequence it
- Measure the basement. Ceiling height and window locations, before anything else. Ten minutes, and it eliminates the unworkable properties fastest.
- Call the city's planning counter. Confirm what's permitted on that specific lot, plus parking and servicing requirements. Free.
- Get three real quotes on the full scope, not a per-square-foot guess. Contractors will tell you which of the four budget-killers apply.
- Get the rent number from actual comparables — current listings for suites in that neighbourhood, not the city average.
- Run the two calculations above with your numbers, on the pessimistic end of every assumption.
- Talk to a broker before you offer, so you know how the suite income will be treated for qualifying and what the financing path is.
Then decide. If it works on conservative inputs with a real contingency, a suite is still the strongest single value-add available to a small BC Interior investor in 2026: suites permitted almost everywhere, 30-year insured financing for owner-occupiers, and rents that support the build. It's just no longer the version of the deal that had $40,000 of provincial money in it, or the 2% federal loan that was announced and then cancelled, and pretending otherwise is how projects run out of budget at drywall.
For the underwriting framework this sits inside, cap rate vs cash-on-cash explains which return figure to trust, monthly costs on a BC Interior rental is the operating-expense reality check, and how to underwrite a duplex works through one line by line.
Sources: Budget 2025, Annex 3 — Canada Secondary Suite Loan Program not implemented · CMHC — Refinance for building secondary suites · Bank of Canada — interest rates for new lending by chartered banks · CMHC — Rental Market Survey data tables
Written by Jagatjeet, as part of a public BC Interior real estate learning journey. Published 31 July 2026. Corrected 6 October 2026. Updated 7 October 2026. Jagatjeet is working toward a BC real estate licence and is not a licensed realtor. Nothing here is financial, legal or tax advice.