Hamilton’s ADU Housing Incentive Program: Get Up to $25,000 Per Unit

Hamilton’s ADU Housing Incentive Program is a city-run initiative that helps pay for building additional dwelling units and small multiplexes by offering a mix of permit-fee rebates and forgivable loans in exchange for creating rental or affordable units. If you are planning a basement suite, garden suite, laneway home, or a small multiplex in eligible parts of Hamilton, this program can significantly improve your numbers and reduce your out-of-pocket costs.

What Is Hamilton’s ADU Housing Incentive Program?

A City Program Backed by the Housing Accelerator Fund

This program is officially part of the City of Hamilton’s “Additional Dwelling Unit and Multi-Plex Housing Incentive Program,” funded through the federal Housing Accelerator Fund. It is designed to encourage small-scale rental housing by making it cheaper to add units on existing residential properties.

The key idea is simple: Hamilton will rebate part of your building permit fees and offer a forgivable loan per new rental unit if you agree to keep the unit as a rental and meet affordability rules for a set period, usually 15 years.

Where It Applies

The program is not citywide in the general sense. It only applies to properties located within the “Housing for Hamilton Community Improvement Project Area” (HHCIPA). Some pockets, such as part of Roxborough, are specifically excluded, so checking your property’s exact location against the official map is an essential first step.

Core Financial Benefits

Permit Fee Rebate

For each eligible additional dwelling unit or multiplex unit, the City will rebate the city application portion of the building permit fee, excluding HST. The rebate is generally up to about $2,000 per building permit, which helps offset your upfront soft costs.

This does not eliminate all permit-related costs, but it can meaningfully reduce the cash required at the beginning of your project.

Forgivable Loan Per Rental Unit

The most powerful part of the program is the 15-year forgivable loan:

• Up to $25,000 per eligible rental unit
  
  
• Typically capped around $150,000 per site for small-scale projects (ADUs, garden suites, and multiplexes up to 6 units)
  
  

As long as you follow the program conditions over the 15-year term, the loan is gradually forgiven and does not need to be repaid. For many homeowners and small investors, this can bridge the gap between “interesting idea” and “financially viable project”.

What “Forgivable” Really Means

The loan is registered and conditional. To keep it fully forgivable, you typically must:

• Maintain the unit as a rental for the full term
  
  
• Respect the affordability criteria, usually keeping rents at or below 100% of Average Market Rent
  
  
• Comply with any other conditions outlined in the City’s agreement
  
  

If you stay compliant for the full 15 years, the loan is forgiven and you effectively keep the funds as a grant. If you break the conditions early, some or all of the loan may need to be repaid.

Basic Eligibility Requirements

1. Location Requirements

Your property must:

• Be located within the City of Hamilton
  
  
• Fall inside the official Housing for Hamilton Community Improvement Project Area (HHCIPA)
  
  
• Not be in one of the excluded sub-areas (for example, part of Roxborough)
  
  

Because eligibility is boundary-based, confirming your address up front is critical before you invest heavily in design or applications.

2. Eligible Unit Types

The program is aimed at small-scale “gentle density” projects. Typical eligible units include:

• Additional Dwelling Units (ADUs)
  
  
  
  • Attached (within the main house or attached structure)
    
    
  • Detached (in a separate building on the lot)
    
    
• Garden suites
  
  
• Laneway or backyard homes
  
  
• Small multiplexes with six or fewer units that require a building permit
  
  

If you are planning a large apartment building, this is not the right program. If you are adding one or a few units to an existing property, it may fit perfectly.

3. Timing and Permit Requirements

Timing is also important:

• The building permit must be issued after March 20, 2024 to qualify
  
  
• Units must require a building permit to be eligible
  
  
• Funds are typically released after an Occupancy Permit has been issued for the new unit or units
  
  

In practice, this means you need to plan ahead and align your design, building permit, and program application with the City’s timelines.

4. Rental Use and Affordability

The program is designed for rental housing, not for owner-occupied extensions alone. To maintain the forgivable loan, your unit usually must:

• Be rented out, rather than used purely as personal extra space
  
  
• Meet affordability requirements, often set at or below 100% of Average Market Rent for comparable units
  
  
• Stay within these rules for at least 15 years
  
  

If your plan is to create long-term rental units, this fits naturally. If you only want short-term rentals or extra personal space, the program will likely not work for you.

How to Apply for Hamilton’s ADU Housing Incentive Program

Step 1: Confirm Your Property Is Eligible

Start by confirming your property is inside the HHCIPA boundary and not in a specifically excluded zone. This usually involves checking a map or confirming directly with the City’s Housing Secretariat or Planning Department.

Step 2: Design Your ADU or Multiplex

Next, work with a designer, architect, or contractor to:

• Develop code-compliant ADU or multiplex drawings
  
  
• Decide on the unit type (basement suite, garden suite, laneway home, small multiplex)
  
  
• Ensure the design satisfies zoning, parking, and building code requirements
  
  

A clear design package helps you obtain permits and smoothly fit within the program’s rules.

Step 3: Obtain a Building Permit

Submit your drawings to the City for a building permit. Remember, only projects with permits issued after March 20, 2024 are eligible under this program.

Step 4: Submit Your Program Application

Once you have your permit (or in some cases alongside the permitting process), you can apply under the:

“Additional Dwelling Unit and Multi-Plex Housing Incentive Program”
through the City’s Housing Secretariat.

Your application will reference the official program guide, which is included as Appendix “D” of the Hamilton Community Improvement Plan.

Step 5: Build, Inspect, and Receive Funding

After your application is approved, you proceed with construction. When your unit is finished:

• A City inspector issues an Occupancy Permit
  
  
• The City then processes:
  
  
  
  • The permit-fee rebate, and
    
    
  • The forgivable loan, subject to signing the loan agreement and committing to ongoing affordability and rental requirements
    
    

From that point, you are in the 15-year compliance period where you must maintain the unit as an eligible rental to keep the loan forgivable.

Practical Takeaways for Homeowners and Investors

What a Single ADU or Garden Suite Might Receive

For a typical single ADU or garden suite in an eligible area, you are generally looking at:

• Up to about $2,000 back on City building permit fees
  
  
• A forgivable loan of up to $25,000 toward construction costs, provided you meet the rental and affordability requirements for 15 years
  
  

On a smaller ADU project, that combination can offset a meaningful portion of design and build costs and improve cash flow during the early years of ownership.

Impact on ADU and Multiplex Pro Formas

For builders and small investors, this program can materially improve your return on investment:

• Reduces effective upfront equity needed
  
  
• Raises cash-on-cash returns, especially in the early years
  
  
• Can be stacked with other tools like federal or provincial tax incentives or CMHC’s MLI Select rental financing
  
  

When combined with rising rental demand in Hamilton, the program can make marginal projects pencil out and turn good projects into strong ones.

When It Makes the Most Sense

This program is especially attractive if:

• You already plan to add a legal rental suite
  
  
• You are comfortable committing to 15 years of rental use and affordability
  
  
• Your property is in the eligible improvement area
  
  
• You are thinking long-term about holding and operating rental units
  
  

If you are primarily looking for personal space or short-term rentals, the conditions may not align with your goals.

Should You Explore the Hamilton ADU Housing Incentive Program?

If you own property in Hamilton and are considering a basement suite, garden suite, laneway home, or small multiplex, this program is absolutely worth exploring. A combination of permit-fee rebates and up to $25,000 per rental unit as a forgivable loan can significantly reduce your risk and improve your long-term returns.

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