Big News for Homebuyers!

The government just dropped some major updates to mortgage rules, and it’s great news if you’re thinking about buying a home. Here’s what’s changing:

• The insured mortgage price cap is going up from $1 million to $1.5 million (effective December 15th).

• 30-year mortgage amortizations are back! First-time homebuyers and anyone buying a new build can now qualify (also effective December 15th).

[Click here to check out the official announcement.]

Who Does This Impact?

These updates are designed for buyers purchasing their *principal residence* up to $1.499M, who are planning to (or need to) put less than 20% down. In cities like Toronto, where home prices can easily push past that million-dollar mark, this could open up more possibilities for many buyers.

What Does This Mean for You?

Here’s how we’re breaking it down:

1) Higher Purchase Prices with Less Than 20% Down  

Right now, if you’re buying for $1.5 million, you’d need to come up with a hefty $300,000 down payment (20%). But starting December 15th, you could buy that same home with just $125,000 down (5% on the first $500K and 10% on the rest up to $1.5M).  

Quick Reminder: An “insured mortgage” means you’re putting less than 20% down. The minimum down payment is still 5% for the first $500K and 10% on the rest. The biggest change is that the cap is moving up from $999,999 to $1.499M.

2) Lower Monthly Payments with a Longer Amortization 

For first-time buyers and anyone buying a new build, mortgages can now stretch up to 30 years (up from 25 years). This means your monthly payments will be lower, which can give you some extra breathing room in your budget. Here’s a quick comparison:

• 25-year amortization: $800,000 mortgage at 4.29% = $4,334.85/month  

• 30-year amortization: $800,000 mortgage at 4.29% = $3,936.53/month

That’s almost $400 in savings each month, just by stretching the loan over five more years! Keep in mind, though, that a longer amortization means you’ll pay more interest over the life of the loan.

3) Potentially Lower Interest Rates

Insured mortgages tend to come with lower rates since the government backs them up in case of a default. On average, insured mortgage rates can be about 0.50% (or 50 basis points) lower than uninsured rates. For example, you might see:

• Uninsured 5-year fixed rate: 4.79%  

• Insured 5-year fixed rate: 4.29%  

While the rate might be lower, keep in mind that there’s an insurance premium to pay (anywhere from 2.8% to 4.0% of the total loan). Most buyers roll this into the mortgage, but it’s good to know upfront.

What’s Next?

There are still a few details to come, but these changes could make a big difference for buyers in higher-priced markets. If you’ve been holding off on buying because you didn’t have 20% down or were worried about monthly payments, this might just be the opportunity you’ve been waiting for!

Have questions or want to know how this impacts your plans? Give us a call or shoot us an email—we’re here to help!