How New Mortgage Reforms Are Making Homeownership Easier - Fifth Avenue REM mediaiqdigital tracking pixel
Home Buying, Real Estate News | September 19, 2024

For many Canadians, especially Millennials and Gen Z, buying a home has become a significant challenge. With housing prices skyrocketing and mortgage payments high, homeownership can feel out of reach.

This September, to help first-time homebuyers and improve affordability, the federal government introduced key changes to mortgage rules.

These updates aim to make it easier to qualify for a mortgage, lower monthly payments, and encourage new home construction. Here’s a breakdown of the most recent changes and other government initiatives designed to help Canadian homebuyers:

1. Extended 30-Year Mortgage Amortizations for First-Time Homebuyers (Effective August 1, 2024)

The new mortgage rules now allow first-time homebuyers purchasing new builds, including condos, to opt for 30-year insured mortgage amortizations. This extension lowers monthly payments by spreading them over a longer period, making it easier for younger Canadians to achieve homeownership.

2. Increased Insured Mortgage Price Cap to $1.5 Million (Effective December 15, 2024)

To reflect today’s housing market, the insured mortgage price cap has been raised from $1 million to $1.5 million. This adjustment is particularly beneficial for buyers in expensive cities like Vancouver and Toronto, allowing more Canadians to qualify for insured mortgages with a down payment of less than 20%.

3. Expanded 30-Year Mortgage Amortizations to All New Builds (Effective December 15, 2024)

In addition to first-time homebuyers, this measure extends the 30-year insured mortgage option to all purchasers of newly built homes. By reducing monthly payments, the government hopes to incentivize the construction and purchase of new homes, easing the housing supply shortage and helping more Canadians become homeowners.

4. Mortgage Switching Without Stress Test

Under the revised Canadian Mortgage Charter, insured mortgage holders can now switch lenders at renewal without undergoing another stress test. This change promotes competition among lenders, helping homeowners secure better interest rates without extra hurdles.

5. Tax-Free First Home Savings Account

The Tax-Free First Home Savings Account (FHSA) lets Canadians contribute up to $8,000 annually, with a lifetime cap of $40,000. Contributions and withdrawals are tax-free when used for a home purchase, making it an effective tool for saving towards a down payment.

6. Enhanced Home Buyers’ Plan (RRSP Withdrawal)

The Home Buyers’ Plan now allows first-time buyers to withdraw up to $60,000 from their RRSPs—up from the previous limit of $35,000. This change gives homebuyers more flexibility and tax benefits when saving for a down payment.

A Brighter Future for Canadian Homebuyers

These reforms represent the most significant updates to Canada’s mortgage landscape in years. By extending mortgage amortization periods, increasing the insured mortgage price cap, and enabling greater flexibility when switching lenders, the government is taking bold steps to make homeownership more accessible.

With these new mortgage rules and savings programs, the dream of owning a home is becoming more achievable for Canadians—especially the younger generations. If you’re looking to buy your first home, these changes could make all the difference.

For more information on these initiatives, read the official government announcement here.

 

 

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