The Government of Canada has announced a series of comprehensive mortgage reforms designed to make homeownership more attainable, particularly for younger Canadians. Rising mortgage costs have long been a barrier to buying a home, especially for Millennials and Gen Z. In response, new rules were introduced on August 1, 2024, allowing 30-year insured mortgages for first-time buyers purchasing newly constructed homes.
The Honourable Chrystia Freeland, Deputy Prime Minister and Minister of Finance, announced further changes to make mortgages more affordable and homeownership more accessible. Key reforms include:
Raising the cap on insured mortgages from $1 million to $1.5 million starting December 15, 2024. This reflects current housing market conditions and will help more Canadians qualify for a mortgage with less than a 20% down payment.
Expanding eligibility for 30-year mortgage amortizations to all first-time homebuyers and buyers of new builds, effective December 15, 2024, reducing monthly payments and boosting affordability. This also aims to encourage new housing construction, addressing the ongoing housing shortage.
These reforms build on the enhanced Canadian Mortgage Charter from Budget 2024, which allows insured mortgage holders to switch lenders at renewal without undergoing another mortgage stress test. This fosters greater competition and ensures that Canadians can secure the best mortgage rates when renewing.
These changes represent the most significant mortgage reforms in decades, forming part of the government's broader plan to build nearly 4 million homes—the largest housing initiative in Canadian history. Additional regulatory updates will be introduced in the coming weeks.
In addition to making mortgages more accessible, the federal government is taking steps to protect homebuyers and renters. Today, blueprints for a Renters’ Bill of Rights and a Home Buyers’ Bill of Rights were unveiled. These new policies, developed in partnership with provinces and territories, aim to eliminate unfair practices, simplify leases, and increase transparency in the housing market. The government is also leveraging the $5 billion Canada Housing Infrastructure Fund to encourage provincial action on issues like renovictions, blind bidding, and standardized lease agreements.
Quotes
“We’ve already helped more than 750,000 Canadians save for a down payment through the Tax-Free First Home Savings Account. Now, with these bold mortgage reforms, we are making it easier for Canadians—especially younger generations—to achieve homeownership. By raising the insured mortgage cap and extending repayment terms, we are unlocking homeownership for more people and encouraging lender competition to secure better rates.”
— The Honourable Chrystia Freeland, Deputy Prime Minister and Minister of Finance
“Everyone deserves a safe, affordable home. These new mortgage measures will significantly help Canadians, especially first-time buyers, as they enter the housing market.”
— The Honourable Sean Fraser, Minister of Housing, Infrastructure, and Communities
Quick Facts
The enhanced Canadian Mortgage Charter ensures that Canadians facing mortgage difficulties have access to tailored relief, and supports first-time homebuyers.
Mortgage loan insurance enables Canadians to finance up to 95% of their home’s purchase price, helping them secure competitive interest rates with smaller down payments.
The government’s housing plan, the largest in Canadian history, will unlock nearly 4 million new homes to make housing more affordable.
The Tax-Free First Home Savings Account allows Canadians to save up to $8,000 annually and $40,000 in total, tax-free, towards a down payment.
The Home Buyers’ Plan limit was increased from $35,000 to $60,000 in Budget 2024, allowing first-time buyers to withdraw from their Registered Retirement Savings Plan (RRSP) to build or buy their first home. This can be combined with the Tax-Free First Home Savings Account for maximum savings.
Source: www.canada.ca
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