The federal government has the most ambitious housing plan in Canadian history-including building 4 million new homes-to make housing more affordable for Canadians. This plan will build a Canada that is fairer for every generation of Canadians, where they can get ahead, where their hard work pays off, and where they can buy a home.
Homeownership is a big part of the middle class dream. That was the deal for generations. But today, young adults feel like the possibility of owning a home like the one they grew up in is less and less likely. The prospect of owning a home in Canada needs to be as real for young people today, as it was for any other generation.
In 2023, the government announced the new Canadian Mortgage Charter, which details the tailored mortgage relief that the government expects banks to provide borrowers who are facing financial difficulty with their mortgage.
Along with interest rates now going down, the reforms announced today, which build on the Canadian Mortgage Charter, will make mortgages more affordable and put homeownership back within reach for Canadians.
Increasing the $1 million price cap for insured mortgages to $1.5 million
If you want to buy a home with a down payment of less than 20 per cent in Canada, you'll need mortgage loan insurance. This lets you get a mortgage for up to 95 per cent of the purchase price of a home while helping ensure that you get a reasonable interest rate, even with a smaller down payment. For example, if the home you are looking to buy is $400,000, you would need a down payment of at least $20,000. Mortgage loan insurance is a key part of ensuring a stable mortgage market; it also covers your lender in case you can't make your payments.
Currently, mortgage loan insurance is not available for homes purchased for over $1 million. This insured-mortgage price cap dates back to 2012, when home prices were lower. The last decade has seen home price increases in major urban centers, particularly around Toronto and Vancouver, beyond the $1 million cap.
By raising the limit to $1.5 million, effective December 15, 2024, the Government of Canada is bringing the program in line with current housing market realities, enabling more Canadians to qualify for a mortgage with a down payment that is less than 20 per cent and expanding access to the cost savings and security that comes with mortgage loan insurance.
Expanding eligibility for 30-year mortgage amortizations to all first-time homebuyers and to all new builds
The cost of monthly mortgage payments is a barrier for many younger Canadians hoping to buy their first home, especially when starting their career. Extending mortgage amortizations available to first-time buyers brings that monthly cost down, making homeownership more affordable for new homeowners as they work their way up the salary ladder.
Currently, the maximum amortization period for insured mortgages in Canada is 25 years. As announced in Budget 2024, starting August 1, 2024, the government made changes to allow 30-year mortgage amortizations for first-time homebuyers purchasing new builds, including condos. The government initially expanded eligibility to first-time home buyers purchasing new builds to incentivize the construction of new homes.
Now, given inflation and interest rates have fallen, the government is expanding access to lower monthly mortgage payments to all first-time homebuyers and to all buyers of new builds, effective December 15, 2024-reducing the cost of monthly mortgage payments and helping more Canadians afford to buy a home. This will unlock the dream of homeownership for more first-time buyers, while also further incentivizing the construction of more new homes.
As the government announced on June 11, 2024:
- To be considered a first-time homebuyer, a borrower must meet one of the following criteria:
- the borrower has never purchased a home before;
- in the last four years, the borrower has not occupied a home as a principal place of residence that either they themselves or their current spouse or common-law partner owned; or,
- the borrower recently experienced the breakdown of a marriage or common-law partnership. On this point, the regulations will follow the approach that the Canada Revenue Agency has taken with respect to the Home Buyers' Plan.
- To be considered a new build, the new home must not have been previously occupied for residential purposes. This requirement is not intended to exclude newly constructed condominiums where there has been an interim occupancy period.
