Updated: Exciting Changes for Homebuyers

We have received more guidance around the qualifying rules for the new changes effective December 15, 2024. We have summarized the changes and criteria below:

Are you a first-time homebuyer or looking to purchase a brand-new home? There are some exciting new changes in Canadian mortgage rules that could make homeownership more accessible, especially for those who are putting down less than 20% down payment.

1. 30-Year Mortgage Amortization for First-Time Homebuyers and New Builds

If you're a first-time homebuyer or purchasing a newly constructed home, you might now qualify for a 30-year mortgage amortization. This can make your monthly payments more manageable by spreading them over a longer period.

To be eligible, the following conditions must be met:

  • Insured Mortgage: Your down payment must be less than 20% of the home’s value.

  • First-Time Homebuyer or New Build: You must either be purchasing your first home or buying a newly constructed property.

Who Qualifies as a First-Time Homebuyer?

You’re considered a first-time homebuyer if you meet any of these criteria:

  • You have never purchased a home before.

  • You haven’t lived in a home you or your spouse owned in the past 4 years.

  • You recently went through a marriage or common-law partnership breakdown, similar to the rules for the Home Buyers’ Plan under the Canada Revenue Agency.

What’s Considered a “Newly Constructed” Home?

A newly constructed home is defined as one that has never been lived in for residential purposes. This applies to all types of homes, including condos, even if there was a interim occupancy period.

2. Higher Purchase Price to $1.5 Million for Insured Mortgages

Another change is the increase in the price cap for insured mortgages from $1 million to less than $1.5 million. This is great news if you're looking at higher-value properties but don’t have 20% down payment.

To qualify, you’ll need to meet these criteria:

  • Insured Mortgage: The LTV ratio must be 80% or higher.

  • Home Price: The value of the home must be below $1.5 million.

Down Payment Requirements:

  • 5% on the first $500,000 of the purchase price.

  • 10% on the portion between $500,000 and $1.5 million.

When Do These Changes Take Effect?

These measures will be available for mortgage applications submitted on or after December 15, 2024. They apply only to mortgages for homes that will be occupied by the borrower or a close relative. All other existing mortgage insurance rules remain in place.

This is a great opportunity for first-time homebuyers and those eyeing newly built homes to enter the market with more flexible qualifying terms. If you’ve been thinking about buying a home, these changes could open the door to more possibilities. Keep these updates in mind as you plan your home-buying journey!

Have questions about how these changes might affect you? Reach out to us to explore your options.

MMG