Canada's new mortgage rules could make it easier to buy a home — Here's what you need to know
Canada's housing market could soon see some major changes to mortgage rules that might make owning a home more realistic for Canadians, especially first-time buyers.
Announced by the Department of Finance on Monday and touted as the "boldest mortgage reforms in decades," these updates are slated to kick in in December and aim to make mortgages in Canada more affordable, especially for millennials and Gen Z.
So, what's new? First, the government has announced it's raising the price cap for insured mortgages to $1.5 million. This move aims to help people in more expensive markets like Vancouver and Toronto, where home prices have skyrocketed in recent years. It means buyers could qualify for a mortgage with less than a 20% down payment on homes priced up to $1.5 million, as opposed to the current $1 million cap.
Another major change is the expansion of the eligibility criteria for 30-year amortizations that were originally introduced last month. This means allowing lower monthly mortgage payments over a longer period of time, offering short-term relief for many young Canadians who are just starting their careers.
Currently, the maximum amortization period for most insured mortgages in Canada is 25 years — although as of August, the government made changes to allow 30-year mortgage amortizations for first-time homebuyers who are purchasing new builds. Now, it's expanding eligibility for these extended mortgages to all first-time buyers and all new builds.
These reforms are set to come into effect on December 14, 2024, and they come shortly after changes already introduced last month. This includes new rules that allow insured mortgage holders to switch lenders at renewal without going through another stress test, giving homeowners more flexibility to shop around for the best deal.
The federal government says these new rules are part of its broader housing plan to boost housing construction and address the housing shortage across the country. The plan aims to open up nearly 4 million new homes, making it easier and more affordable for Canadians to find a place to call their own.
If you're considering buying a home, these changes could offer new opportunities, but it's a good idea to chat with a mortgage expert to understand how the new rules might benefit you!
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