Canada’s federal government is reshaping its approach to housing and the changes coming in Budget 2025 are significant. While a new agency, Build Canada Homes, is being launched to boost construction, overall federal spending on housing is set to decline sharply over the next few years. Here’s what that means for affordability, housing supply, and the programs Canadians rely on.
Federal planned spending on housing programs will drop 56% between 2025-26 and 2028-29.
2025-26: $9.8 billion
2028-29: $4.3 billion
This steep decline is largely because many existing programs are expiring, and Budget 2025 introduces additional cuts. Even with new funding for Build Canada Homes, it doesn’t fully make up for the reductions.
Build Canada Homes (BCH) is the centrepiece of Budget 2025’s housing strategy. It aims to boost housing supply through:
Direct construction of homes
Funding for new builds
Helping community housing providers buy existing rental buildings
Between 2025-26 and 2029-30, BCH plans to spend $7.3 billion, most of which is new funding. When you include loans and asset development, the total rises to $13 billion.
$625 million for the Canada Rental Protection Fund (to help community groups buy rental buildings at risk of redevelopment)
$1 billion for transitional and supportive housing
$5.4 billion for grants, contributions, and loan concessions for affordable housing
This investment is meant to help speed up construction, especially on federal land, and promote cost-effective building methods like modular and factory-built homes.
Although BCH is part of the federal goal to double homebuilding over the next decade, no full plan for that goal exists yet. Based on its funding and program design, BCH is expected to have a modest impact:
Total: ~26,000 units
Affordable for low-income households: ~13,000 units
This represents:
2.1% increase in projected national housing completions
Addresses only 3.7% of the estimated 2035 housing shortfall (690,000 homes)
So while BCH will help, it won’t dramatically close Canada’s housing gap.
While BCH grows, the Canada Mortgage and Housing Corporation (CMHC) faces major funding reductions.
Canada Housing Benefit (monthly rent support)
Affordable Housing Fund
Co-operative Housing Development Program
Federal Lands Initiative
Innovation Fund
Housing Accelerator Fund
Budget 2025 adds further cuts: $2.4 billion from CMHC programs between 2026–27 and 2029–30, and $860 million per year ongoing.
This will likely limit CMHC’s ability to maintain existing social housing—an area where spending cannot easily be reduced without impacting vulnerable households.
Unless renewed, several important housing-related commitments end between 2026 and 2029, including:
On-reserve housing funding
Reaching Home (Canada’s main homelessness program)
Métis, Inuit, and First Nations housing agreements
This adds even more uncertainty to future affordability supports.
Build Canada Homes will create new affordable units, but the benefits will unfold gradually over many years.
At the same time:
Rent supports are shrinking
Programs that help low-income households now are expiring
Funding for maintaining existing social housing is tightening
The result is a shift away from immediate affordability support and toward long-term capital projects, leaving many households without near-term help.
Budget 2025 marks a major change in Canada’s housing strategy:
O More focus on building new homes through Build Canada Homes
O Important investments in transitional, supportive, and affordable housing construction
But…
X Overall federal housing spending drops by more than half
X Key affordability programs are ending or shrinking
X BCH’s impact on housing supply will be helpful but relatively small
Canada is investing in long-term solutions, but short-term affordability pressures are expected to worsen as direct supports decline.
Current federal housing spending: $9.8B (2025–26)
Planned spending later: $4.3B (2028–29)
That’s a 56% cut because several existing programs are ending and Budget 2025 introduces new reductions.
New federal agency focused on building and supporting new housing.
Plans to spend $7.3B over five years (2025–30).
Total cash moving through the agency (including loans + assets): $13B.
Its main goals:
Build more housing using modular/factory-built methods
Help others build with grants and loans
Help non-profits buy buildings before developers redevelop them
$625M ? Help community housing groups buy rental buildings (prevents rent hikes, but doesn’t add new homes).
$1B ? Build transitional & supportive housing (about 3,669 new units).
$5.4B ? Grants/loans to support more affordable housing builds.
$3.1B (additional) ? Build housing directly on federal land.
BCH is expected to create about 26,000 new homes over five years.
About 13,000 of these will be affordable for low-income households.
This only adds about 2.1% more housing than what Canada was already on track to build.
It will only address about 3.7% of Canada’s estimated housing shortage.
Several major programs have no renewal announced, including:
Canada Housing Benefit
Affordable Housing Fund
Housing Accelerator Fund
Support for existing social housing
Funding for homelessness programs (ending by 2027-28)
Indigenous housing programs (ending 2027–29)
Budget 2025 cuts $2.4B from CMHC housing programs (2026–2030).
After that, $860M per year in further cuts.
This likely means funding for social housing will drop even more.
Canada is shifting away from programs that support renters and low-income households right now.
Funding is moving toward building long-term assets, but these take years to help.
Build Canada Homes will help a bit, but not nearly enough to offset all the cuts.
Overall affordability support in Canada is going down significantly.
