New Mortgage Regulation Changes Have Taken Effect: What You Need to Know

by | Mortgages

Effective as of December 2024, the Canadian government has implemented a few significant changes to the mortgage regulations that are designed to provide more flexibility and accessibility for first-time home buyers and those with less than 20% down payment. Let’s break down how they might impact your plans to buy a home.

Extended Amortizations for High-Ratio Mortgages

One of the most notable changes is the increased amortization period for high-ratio(insured) mortgages. Previously, buyers who put down less than 20% were limited to a 25-year amortization period. Now, first-time home buyers and those purchasing new-build homes can access amortization periods of up to 30 years when putting less than 20% down payment.

This change can provide relief by lowering monthly mortgage payments, making home ownership more affordable and accessible. However, this could result in higher interest costs over the life of the mortgage. The potential trade-offs should be taken into consideration.

Increased Insured Mortgage Cap

Another major change is the increase in the insured mortgage cap. Previously, homes with a purchase price exceeding $999,999.99 required buyers to put down at least 20%. That cap has now been raised to $1.5 million, meaning buyers can purchase a home valued up to $1.5 million with a down payment of less than 20%, provided they qualify for mortgage insurance.

As an example, under the old rules, purchasing a $1.5 million home required a minimum down payment of $300,000 (20%). Now, the minimum down payment could be as low as $125,000, making homes in higher price ranges more accessible to a broader group of buyers.

Final Thoughts

These updated rules reflect the government’s efforts to make home ownership more achievable for Canadians. Lower monthly payments and reduced down payment requirements can make it easier to enter the housing market, and in areas with higher overall housing prices that have historically excluded many buyers from affording homes, these changes open up new potential opportunities.

-Chris Faubert