Nova Scotia's Secondary Suite Incentive Program: What Happened to the $40,000 Forgivable Loan?

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May 25, 2026

What the Program Was

The Nova Scotia Secondary and Backyard Suite Incentive Program launched in October 2023, initially offering forgivable loans of up to $25,000, later increased to $40,000 in April 2024, to homeowners who built qualifying secondary or backyard suites on their principal residence. The province's program page is no longer online.

A forgivable loan means the money does not need to be repaid, provided the homeowner meets ongoing conditions. The loan was forgiven at a rate of 20% per year over a five-year term, so if you met all requirements for five years, the full amount was forgiven.

How the Program Worked

The program funded up to 50% of eligible project costs, to a maximum of $40,000. Eligible costs included construction materials, labour, permits, and the purchase of a prefabricated backyard suite. Applicants had to:

Be the registered owner(s) of the property
Live on the property as their primary residence
Have up-to-date property taxes
Be a Nova Scotia resident (Canadian citizen or permanent resident)
Have funds available to pay for construction upfront (the loan was reimbursement-based, paid after an occupancy permit was issued)

Who Could Live in the Suite?

To have the loan forgiven, the tenant and homeowner had to meet one of these conditions:

The tenant is a family member aged 65 or older, or a person living with a disability (supportive housing stream)
The homeowner is aged 65 or older, or a person living with a disability, and rents to a family member
The tenant is an individual or household below provincial income limits, renting at no more than 80% of average market rent (affordable housing stream)

In April 2024, the program was expanded to include a wider range of family members: grandchildren, siblings, aunts, uncles, nieces, and nephews.

The Rent Caps in Practice

Under the affordable housing stream, tenant household income and rent were both capped, with rent held to no more than 80% of average market rent. That created a real tension: a backyard suite is a significant investment, and renting it at capped rates made the return marginal without the forgivable loan. Our backyard suite cost guide covers what these projects cost.

Program Uptake and Limitations

Uptake was slow at first, and many homeowners building suites already had financing in place and did not rely on the forgivable loan. For families trying to build accessible housing for relatives with disabilities, however, the program was genuinely meaningful.

Why the Program Ended

The provincial Secondary and Backyard Suite Incentive Program concluded at the end of March 2026. CBC News reported the end of the program on May 9, 2026, quoting Housing Minister John White, who said 624 applications were approved and that funding remains in place for approved projects still being completed. A Nova Scotia couple planning to build a backyard suite on their rural property told CBC the project became significantly harder without the program. The Canadian Home Builders' Association Nova Scotia expressed concern: "For many homeowners, the financial support made these projects feasible. Without it, fewer secondary suites may move forward, which will directly impact supply."

What Is Still Available? The HRM Second Unit Incentive Program

Within Halifax Regional Municipality, a separate program exists: the Second Unit Incentive Program, funded through the federal Housing Accelerator Fund. It offers up to $13,000 in non-repayable grants for a backyard suite, a basement apartment or in-law suite, or a duplex conversion. HRM's page says there are no rent limits, but the grant must be repaid if the unit is used as a short-term rental within five years. In early 2026 Council opened the program to non-profits and said more than one unit may be eligible, subject to land use rules. The application deadline is October 11, 2026, you must have a valid building permit issued by that date, and occupancy must be in place by April 1, 2027. Visit Halifax's Second Unit Incentive page to apply.

This program covers homeowners within HRM only. Homeowners outside HRM do not currently have access to an equivalent provincial program.

Other Current Incentives and Financing Options

Multigenerational Home Renovation Tax Credit

If you're building a self-contained suite so a senior (65 or older) or an adult eligible for the disability tax credit can live with a relative, the federal Multigenerational Home Renovation Tax Credit may apply. According to CRA, it is a refundable credit on up to $50,000 of qualifying costs, worth up to $7,250 for the 2025 tax year. Check CRA for the rate in the year your renovation is finished.

CMHC Insured Refinance for Secondary Suites

CMHC insures refinancing of an owner-occupied home to add a self-contained suite: up to 90% of the property's value (under $2,000,000), amortization up to 30 years, up to four units in total, and no rentals shorter than 90 days. You apply through a lender. It is a mortgage, not a grant.

Programs That No Longer Apply

The federal Canada Secondary Suite Loan Program, announced at $80,000, was cancelled in Budget 2025 before it launched, and the Canada Greener Homes Grant is closed. See our roundup of in-law suite grants and loans in Nova Scotia for a full status check.

What This Means for Your Project

If you were counting on the provincial $40,000 forgivable loan, it's important to revise your numbers. The HRM municipal grant remains available for Halifax homeowners until its October 11, 2026 deadline, and the tax credit and CMHC financing can still help. The economics of a backyard suite can still work for many Halifax homeowners with eligible properties, but plan the budget without assuming a grant.

Get Help Planning Your Backyard Suite Project

Halifax General Contractors helps homeowners navigate both the financial and regulatory landscape for backyard suites. Visit our Backyard Suite Builder page, use our Cost Calculator, or explore our Home Additions in Nova Scotia and Aging in Place in Nova Scotia pages. To start your project, request a free quote.