In late 2024, the federal government announced new mortgage rules that could make homeownership more accessible, particularly for first-time buyers. If you’re thinking about buying a home or planning for the future, here’s what you need to know.
- More homes now qualify for a lower down payment
Previously, homes priced over $1 million weren’t eligible for mortgage insurance, meaning buyers needed at least a 20% down payment if they wanted to buy a home. This made home ownership difficult for many, especially in cities like Vancouver or Toronto where even modest homes often exceed $1 million.
With the new $1.5M cap, more homes are now eligible for insured mortgages1. This change could help more Canadians enter the housing market sooner, without needing to save the full 20% down.
A mortgage calculator is a helpful tool to see how these changes could make buying a home more affordable given your financial situation.
- Longer amortization period for first-time homebuyers and buyers of new builds
First-time homebuyers and those buying a newly-built home now have the option of a 30-year insured mortgage instead of the previous 25-year limit1. This longer amortization period reduces monthly mortgage payments by spreading the loan amount over a longer time. However, it’s important to note that a longer mortgage term means more interest paid over time, and a shorter term may be a better choice depending on your circumstances. It’s a good idea to chat these decisions through with a Mortgage Advisor so you can make a decision that makes the most sense for your financial situation and financial goals.
This change is also designed to incentivize new home construction. By making it easier to finance newly-built homes, the government hopes to encourage more housing development, which could help improve supply and affordability in the long run.
What do these new mortgage rules mean for you?
These updates could provide new opportunities for Canadians who previously struggled to break into the housing market. Lower monthly payments, smaller down payment requirements, and more financing options for increasing supply of available homes should all contribute to greater flexibility for hopeful buyers.
However, every homebuyer’s situation is different. It’s important to consider how these changes align with your long-term financial goals. As we mentioned earlier, a lower monthly payment may help with affordability in the short term, but a longer mortgage term increases the total interest paid overall. Similarly, qualifying for an insured mortgage with a lower down payment can make homeownership possible sooner, but it also means borrowing more. And a reminder that the insured programs will require members to pay insurance premiums that will be added to your mortgage balance.
Understanding mortgage rules and figuring out what they mean for you isn’t always easy, but the good news is you don’t have to do it alone. Speak with a Mortgage Advisor so we can walk you through all your options and help you through every step of the mortgage process.
The stuff we have to say
This article is provided for general information purposes only. It is not to be relied upon as financial, tax, or investment advice or guarantees about the future, nor should it be considered a recommendation to buy or sell. Information contained in this article, including information relating to interest rates, market conditions, tax rules, fees, and other investment factors are subject to change without notice and Cost Capital Savings Federal Credit Union is not responsible to update this information. All third party sources are believed to be accurate and reliable as of the date of publication and Coast Capital Savings Federal Credit Union does not guarantee accuracy or reliability of such sources. Readers should consult their own professional advisor for specific financial, investment, and tax advice tailored to their needs to ensure that individual circumstances are considered properly and action is taken based on the latest available information.
Coast Capital Savings Federal Credit Union provides advice and service related to deposit, loan and mortgage products. Coast Capital Wealth Management Ltd provides investment and financial planning services. Coast Capital Financial Management Ltd. provides advice and service related to segregated funds, annuities and life insurance products. Worldsource Financial Management Inc. provides advice and service relating to mutual funds.
