In Budget 2024, the federal government announced it would amend mortgage rules to allow up to 30 year mortgages for first-time homebuyers purchasing new builds.
Starting August 1, 2024, the strengthened Canadian Mortgage Charter will help more Canadians unlock the door to their first home by allowing first-time buyers of newly built homes to have an additional five years to pay off their mortgage, resulting in lower monthly payments. This is about restoring generational fairness to the housing market for younger Canadians.
To make it easier for younger Canadians to reach the dream of homeownership and to encourage new supply, while avoiding inducing housing demand, the government has carefully designed this measure to only apply to first-time buyers purchasing newly built homes.
Borrowers that satisfy the following requirements will be eligible for up to 30 year mortgage amortizations:
- First-Time Homebuyer: At least one of the borrowers on an application must be a first-time homebuyer. 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 4 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.
- Newly Constructed Home: The property that the borrower is purchasing must be a newly constructed home. To be considered a newly constructed home, 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.
- Effective Date: This measure will be available for mortgage insurance applications that lenders submit to mortgage insurers on or after August 1, 2024. The government expects lenders will begin offering 30 year mortgages to eligible first time buyers as soon as August 1.
- This measure will only apply to high-ratio mortgages (mortgages where the loan amount exceeds 80 per cent of the home price) on owner-occupied properties.
- All other eligibility criteria for government-guaranteed mortgage insurance will remain in place.
