Finally some good news the government sets new rules to help first-time home buyers in Canada. Some changes to insured mortgages were set in August 2024 to allow first time home buyers access a newly built home with an extended amortization period to 30 years. This was limited to high ratio borrowers (those with less than 20% down payment) for a new built or presale property. This policy has now been expanded to allow the following changes – effective December 15,2024
1. The 30 year amortization period will now apply to high ratio borrowers for an existing or new property.
2. The maximum purchase price for an insured mortgage, previously $1M will now be $1.5M.
What does this mean for a first time home buyer who could previously qualify for a $999,000 purchase with 10% down. Extending the amortization from 25 to 30 years and the limit above $1M allows the borrower to now consider a property at $1,050,000 (or about 5% more buying power) without increasing their original down payment amount. This allows them to save some money aside for closing costs or furniture while securing a higher priced home to suit their needs. As rates continue to trend down another .25% drop could add another $50K in buying power.
With the government set new rules to help first-time home buyers this will hopefully go a long way to improve the chance of home ownership.