GOHBA Member Brief: Federal Budget 2026 – Housing and Construction Measures

 

The federal government's 2026 Budget includes several measures of interest to Ottawa's residential construction industry, including changes to mortgage financing, support for construction productivity, and investments in housing infrastructure and approvals modernization.

 

While the Budget includes significant investments in housing, relatively few new measures directly address the financial viability of market-based ownership housing.

 

GOHBA has highlighted several measures of particular interest to members.

 

Financing Missing Middle Housing

 

Budget 2026 modifies mortgage loan insurance rules for small multi-unit residential projects that could help the financing of missing middle projects.  The changes include a maximum loan-to-value ratio of up to 90% for new construction projects of 3 to 50 units, with maximum amortizations of 30 years for 3–4 unit projects and 50 years for projects of 5–50 units. There are also now no maximum property value caps or owner-occupancy requirements.

 

The financing changes could make smaller infill and rental developments, like triplexes, fourplexes and small apartment buildings more viable to build. This supports Ottawa's intensification objectives and the economics of missing-middle housing.

 

As GOHBA has advocated, municipal policies and zoning are only part of the equation – projects need to be financially viable for homes to get built.

 

However, the new measures will only be available for mortgage insurance applications submitted on or after February 1, 2027. This could have the unintended consequence of temporarily slowing new infill construction as some proponents defer financing decisions to take advantage of the new rules.

 

Additional Measures to Support Housing Supply and Construction

 

GOHBA also welcomes a suite of proposed Budget measures that could help improve housing supply, affordability and construction efficiency, including:

 

• $100 million over 3 years (beginning 2027–28) to support Municipal e-permitting and AI to modernize and accelerate approvals
• $300 million over 3 years (beginning 2028–29, plus $200 million in future years) to support Modern construction methods for industrial capacity, prefabrication and modular construction
• $67.7 million over 4 years, plus $101.2 million in future years to improve housing data and construction standards to support new building methods
• More timely updates to the National Model Building Code to support faster recognition of innovative construction approaches
• An additional $13 billion over ten years (for a total capitalisation $45 billion, starting in 2028-29), to boost the capital of Build Canada Homes and construction of non-market housing across this country.
• $2 billion over eight years, starting in 2026-27, for a National Heat Pump Rebate Program to help up to 820,000 households install eligible cold-climate heat pumps (previously announced).
• $107.1 million over three years, starting in 2027-28, for a Deep Retrofit Accelerator Initiative to support deep retrofits in commercial, institutional, and mid- or high-rise multi-unit residential buildings (previously announced).
• $1.5 billion over four years, starting in 2027-28, and $387.4 million in future years to prepare federal lands for housing by funding water, wastewater, roads, and other enabling infrastructure. The federal government explicitly recognizes that land cannot become housing supply without investment in servicing infrastructure.
• Exempting new residential properties from the foreign buyer ban.

 

Homebuilding and the Productivity Mega Deduction

 

Budget 2026 includes the previously announced Productivity Mega Deduction, which is designed to help firms invest in the machinery, equipment, and technologies needed to complete projects more quickly and efficiently.

 

For developers, builders, renovators, and trade contractors, the Deduction would allow the full cost of eligible assets (such as excavators, mobile cranes, concrete mixers and jackhammers) to be deducted in the year they become available for use, rather than depreciated over several years. The budget also identifies equipment used in modular housing production. For firms investing in their own equipment fleets, site operations or factory-built housing capabilities, this could represent substantial tax benefits and improve cash flow.

 

Further Measures to Help Housing Ownership Still Under Consideration by Feds

 

The federal government acknowledges the importance of lowering taxes, fees and development charges, yet significant new housing investments in Budget 2026 are really concentrated in non-market housing, construction innovation and targeted financing.

 

Budget 2026 however does reference completed consultations on new measures to help homebuilders build more homes for Canadians to own, faster. The federal government indicates it is considering a range of options aimed at lowering construction costs, improving access to capital and financing, and accelerating ownership housing construction. While no specific additional measures were announced, this signals the potential for further federal action.