The Department of Finance Canada has rolled out some big changes to mortgage rules, aiming to make it easier for Canadians, especially Millennials and Gen Z, to buy their first home. Starting August 1, 2024, new mortgage regulations now allow 30-year insured mortgage amortizations for first-time buyers purchasing new builds.
Key Mortgage Reforms You Should Know About
Finance Minister Chrystia Freeland shared several changes designed to make homeownership more accessible:
- Higher Insured Mortgage Cap: The price cap for insured mortgages will increase from $1 million to $1.5 million, effective December 15, 2024. This update reflects the current housing market and helps more Canadians qualify for a mortgage with less than a 20% down payment.
- Extended 30-Year Mortgage Amortizations: This option is now available to all first-time homebuyers and those buying new builds. By extending the amortization period, monthly mortgage payments become more affordable, making it easier for more Canadians to buy a home. This also aims to encourage new housing construction, which helps tackle the housing shortage.
- Canadian Mortgage Charter Update: Announced in Budget 2024, the updated charter lets insured mortgage holders switch lenders at renewal without another mortgage stress test. This move increases competition among lenders, allowing more Canadians to secure better mortgage rates.
These are some of the most significant mortgage changes in decades, part of a broader plan to build nearly 4 million new homes—the most ambitious housing initiative in Canadian history. More details and regulations will be announced in the coming weeks.
Protecting Renters and Home Buyers
Besides making mortgages more affordable, the government is also focused on protecting the rights of renters and home buyers. The new Renters’ Bill of Rights and Home Buyers’ Bill of Rights aim to protect renters from unfair practices, simplify leases, and make the home-buying process more transparent. The government is working with provinces and territories to roll out these rights, using the $5 billion available through the Canada Housing Infrastructure Fund. Potential measures include protecting Canadians from renovictions and blind bidding, standardizing lease agreements, and providing better access to sales price history.
What Government Officials Are Saying
Deputy Prime Minister and Minister of Finance Chrystia Freeland said, “We are now making the boldest mortgage reforms in decades to unlock homeownership for younger Canadians. We are increasing the insured mortgage cap to reflect home prices in more expensive cities, allowing homebuyers more time to pay off their mortgage, and helping homeowners switch lenders to find the lowest interest rate at renewal.”
Minister of Housing, Infrastructure, and Communities Sean Fraser added, “Everyone deserves a safe and affordable place to call home, and these mortgage measures will go a long way in helping Canadians looking to buy their first home.”
Quick Facts
- The Canadian Mortgage Charter sets expectations for financial institutions to offer tailored relief to Canadians in mortgage hardship, making it easier to buy a first home.
- Mortgage loan insurance allows Canadians to get a mortgage for up to 95% of a home’s purchase price, ensuring they receive reasonable interest rates with a smaller down payment.
- The federal government’s housing plan aims to add nearly 4 million homes, making housing more affordable across the country.
- The Tax-Free First Home Savings Account allows Canadians to save up to $8,000 per year, with a lifetime limit of $40,000, to use towards their first down payment.
- The Home Buyers’ Plan limit has been increased from $35,000 to $60,000, allowing first-time homebuyers to use RRSP contributions to save up to $25,000 more for their down payment.
For more information on these mortgage reforms and how they can help you, check out the Department of Finance Canada website.
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