Big News for Canadian Homebuyers: Federal Government Increases Insured Mortgage Price Cap and Introduces 30-Year Amortization Option

Understanding the New Mortgage Policies

Insured Mortgage Price Cap Raised to $1.5 Million

The federal government has increased the price cap for insured mortgages from $1 million to $1.5 million. This means that buyers purchasing homes in this range can qualify for high loan-to-value mortgage insurance. 

The down payment requirements for insured mortgages as of December 15th:

     •           5% for the first $500,000 of the purchase price.

     •           10% for the portion between $500,000 and $1.5 million.

For example, starting December 15, a buyer could purchase a $1.5-million home with a down payment of just $125,000, compared to the $300,000 required for uninsured mortgages. This is expected to provide much-needed relief to buyers in competitive and high-priced markets.

30-Year Amortizations Expanded

In another major shift, the government is extending 30-year amortizations to insured mortgages for certain buyers. This option will now be available to:

1. First-time homebuyers, provided they meet one of the following criteria: 

• Never owned a home before.
• Haven’t owned or occupied a principal residence in the past four years.
• Recently experienced a breakdown in a marriage or common-law relationship.

2. New-build buyers, including newly constructed condominiums with interim occupancy periods.

A 30-year amortization option can significantly reduce monthly mortgage payments, providing relief in the current high-interest rate environment.

Why These Changes Matter

For buyers in Canada’s priciest markets, where homes frequently exceed the previous $1-million cap, these updates are a game-changer. They reduce the upfront financial barrier to homeownership and offer more flexibility with lower monthly payments, which could help many Canadians achieve their dream of owning a home.

According to BMO’s senior economist Robert Kavcic, extending 30-year amortizations could increase purchasing power by around 10%, making home buying more attainable for many. Combined with falling fixed mortgage rates, these measures may contribute to a stronger housing market in 2025.

How to Take Advantage of the New Rules

Starting December 15, 2024, brokers can begin submitting applications to lenders and insurers under the new guidelines.

Whether you’re a first-time buyer, a newcomer to Canada, or upgrading to a larger home, these changes could be the perfect opportunity to make your homeownership dreams a reality.

Need personalized mortgage advice? Contact me today! Let’s work together to make your homeownership goals a reality.