Ottawa to allow 30-year mortgage loans
Homebuyers will also soon be able to buy homes costing up to $1.5 million without a 20% down payment.
First-time buyers of resale homes and all buyers of newly built homes in Canada will soon have access to longer mortgage terms to help reduce their monthly payments, the federal government has announced. This change expands on the current offering, which allows first-time buyers of newly built homes to access extended mortgage terms.
Deputy Prime Minister Chrystia Freeland made the announcement during a press conference in Ottawa on Monday, revealing that the amortization period for insured mortgage loans will be extended from 25 years to 30 years.
Additionally, the government plans to increase the price threshold for homes that require a 20% down payment. Currently, this applies to homes priced over $1 million, but the new threshold will raise that limit to $1.5 million.
“This move will help more young Canadians achieve their dream of homeownership,” Freeland said. She explained that allowing longer-term loans for buyers of new-build homes is intended to create more demand, which, in turn, could encourage greater housing supply.
First-time buyers of resale homes and all buyers of newly built homes across Canada will soon be able to access longer mortgage terms to help reduce their monthly payments, the federal government announced. This expands the current terms already available to first-time buyers of new builds.
In its 2024 budget, the federal government pledged to introduce 30-year amortization periods for insured mortgages — for buyers who put down less than 20% — but initially limited this to first-time buyers of new-build homes. The policy aimed to ease pressure on rental markets and boost home construction amidst economic challenges.
That policy took effect on August 1, but even before it was implemented, there was pressure to expand it. Advocates and industry groups urged the government to extend longer loan terms to all first-time buyers, as high home prices in many cities and rising borrowing costs have sidelined many potential buyers.
For example, in Toronto, the average home price in August exceeded $1 million, with condos averaging around $680,000 and detached houses nearing $1.7 million, according to the Toronto Regional Real Estate Board.
The newly announced mortgage rules will come into effect on December 15, Deputy Prime Minister Chrystia Freeland confirmed.
Sourced by: Toronto STAR