Mortgage rules: the return of 30-year amortization and insured loans up to $1.5M
13 Dec 2024
2025: A Year Full of Opportunities for Buyers… and Sellers
Since June 2024, the Bank of Canada has lowered its key interest rate multiple times, and economists expect further cuts in 2025. It could even drop to 2.75%. In addition, two federal mortgage reforms came into effect on December 15, 2024: 30-year amortization for first-time buyers (and new construction buyers) and an increase of the insured loan limit to $1.5 million. These changes aim to make homeownership simpler and more affordable. Let’s explore what this means for you!
30-Year Mortgage Amortization
With a 30-year amortization, your monthly payments are lower, which can be helpful if your budget is tight. It also allows you to borrow a bit more, as your qualification ratio improves useful in markets where prices often exceed one million dollars.
Until now, this option was limited to refinances or conventional mortgages (more than 20% down payment), but it will soon be available for insured loans, making it accessible to all first-time buyers, whether the property is new or existing.
Be aware, however: borrowing over 30 years means paying more interest over the life of the loan. Your home could end up costing more in the long run. Make sure to carefully assess the financial impact before choosing this option.
Mortgage Limit Increased to $1.5 Million
Since 2012, insured mortgages were capped at $1 million, which was challenging in major cities where homes often cost more. With the new $1.5 million limit, buyers with less than 20% down payment can access larger or better-located properties, particularly in central neighborhoods of Montreal.
This measure mainly benefits families looking for a more spacious city home and buyers interested in income properties, as long as they occupy the property, opening the door to opportunities that were previously out of reach.
Which Properties Are Eligible?
These new rules apply to all types of residences: houses, condos, and rental buildings, unless otherwise specified.
What Is an Insured Mortgage? An insured mortgage applies when your down payment is less than 20% of the purchase price. This mandatory insurance protects the lender in case of default. Well-known insurers include CMHC, Sagen, and Canada Guaranty. Here are the new down payment requirements:
With the new $1.5 million limit, these conditions allow you to buy more expensive properties without needing to save a large down payment. |
Impact on the real estate market
More options for buyers
Ces réformes pourraient élargir les choix des premiers acheteurs en rendant accessibles des propriétés mieux situées, plus spacieuses, rénovées ou même des propriétés à revenus, là où seuls les condos ou maisons modestes, ou en banlieue, étaient envisageables auparavant.
Boost to new construction
En facilitant l'accès à des montants plus élevés, le gouvernement espère encourager la construction de nouveaux logements, réduisant ainsi la pression sur le marché existant. On l’espère nous aussi !
Previously Inaccessible Neighborhoods
In cities like Montreal, Toronto, or Vancouver, where prices often exceed one million, these measures could open new opportunities for buyers earlier in their decision-making process, particularly in neighborhoods that were previously unaffordable.
Could Prices Increase?
Yes! When borrowing rules are relaxed, real estate prices tend to rise, as we saw during the pandemic with very low interest rates. These new measures could create a more competitive market starting January 2025, introducing a new group of buyers (with the insured loan limit rising to $1.5 million), which benefits sellers through increased demand.
Other Buyer-Friendly Measures
Ce compte permet de cotiser jusqu’à 8 000 $ par an (40 000 $ au total) pour économiser en vue de votre première mise de fonds, sans impôt sur les cotisations ni sur les retraits.
The HBP limit increased from $35,000 to $60,000, as announced in the 2024 federal budget. The HBP allows you to withdraw funds from your own RRSP to use as a down payment for a first property. The HBP and TFSA savings can be used together to purchase a first home. Also, check for incentives offered by certain cities or municipalities to assist families and first-time buyers. For more information on the enhanced Canadian Mortgage Charter, presented in the 2024 federal budget, click here >> |
Get the right support to maximize your chances in 2025
With lower interest rates and new mortgage reforms, 2025 will be a favorable year to buy a property.
To navigate this evolving market, team up with an experienced real estate agent to find the ideal property for your needs and budget, and a mortgage broker to optimize your financing. These experts will guide you every step of the way and help you make the most of the new opportunities.
Ready to get started? Contact a broker from our team to maximize your options today!
