The federal government has announced sweeping changes to Canada's mortgage insurance system—changes the Finance Minister calls "the boldest mortgage reforms in decades." If you're a first-time buyer, building new construction, or planning to enter the housing market, these changes could significantly improve your purchasing power. What Changed: The Key Announcements On September 16, 2024, the federal government unveiled major reforms to CMHC mortgage insurance rules. These changes took effect on December 15, 2024. The Headlines New Rule Insured Mortgage Limit $1 million $1.5 million (first-time buyers & new builds) 30-Year Amortization Only new construction All first-time buyers + new builds Standard Limit $1 million $1 million (resale, repeat buyers) Who Qualifies for the $1.5 Million Limit? The expanded $1.5 million insured mortgage limit applies to two groups: 1. First-Time Home Buyers If you've never owned a home (or haven't owned in the past 4 years), you can now purchase homes up to $1.5 million with less than 20% down payment. Use our affordability calculator to see your maximum purchase price. Example: A first-time buyer purchasing a $1.4 million home now needs: 5% on first $500,000 = $25,000 10% on remaining $900,000 = $90,000 Total down payment: $115,000 (8.2%) Previously, this purchase would have required 20% down ($280,000) because it exceeded the $1 million limit. 2. New Construction Purchases Anyone—first-time or repeat buyer—purchasing a newly built home qualifies for the $1.5 million limit with insured financing. Why new construction? The government aims to incentivize new home building to address housing supply shortages. The 30-Year Amortization Expansion Previously, 30-year amortization for insured mortgages was only available for new construction. Now it's available to: All first-time home buyers (any property type) All new construction buyers (first-time or repeat) Impact on Monthly Payments Extending from 25 to 30 years significantly reduces monthly payments: Monthly Savings $600,000 (5% down) $3,287 $2,936 $351 $900,000 (7.5% down) $4,792 $4,280 $512 $1,200,000 (10% down) $6,219 $5,554 $665 Based on 4.5% interest rate. Actual rates vary. Trade-off: You'll pay more interest over the life of the mortgage, but lower monthly payments improve affordability and help more Canadians qualify. Who Still Follows the $1 Million Limit? The original $1 million limit remains for: Repeat buyers purchasing resale homes: If you've owned before and are buying an existing (not new) home over $1 million, you need 20% down Investment properties: No change—investment properties always require 20% minimum down payment Refinances: CMHC insurance doesn't apply to refinancing Updated Down Payment Requirements (2024) Here's the complete breakdown of current down payment rules: First-Time Buyers & New Construction (Up to $1.5M) Minimum Down Payment Up to $500,000 5% $500,001 - $999,999 5% on first $500K + 10% on remainder $1,000,000 - $1,499,999 5% on first $500K + 10% on remainder $1,500,000+ 20% (no CMHC insurance) Resale Purchases by Repeat Buyers Minimum Down Payment Up to $500,000 5% $500,001 - $999,999 5% on first $500K + 10% on remainder $1,000,000+ 20% (no CMHC insurance) Use our CMHC calculator to estimate your mortgage insurance premium. CMHC Premium Rates (Unchanged) The mortgage insurance premium rates remain the same: Premium Rate 5% - 9.99% 4.00% 10% - 14.99% 3.10% 15% - 19.99% 2.80% The premium is added to your mortgage balance and paid over the life of the loan. How This Affects Different Buyers First-Time Buyers in Expensive Markets Winners: Buyers in Toronto, Vancouver, and other high-cost markets where average home prices exceed $1 million. The math: A $1.3 million condo in Toronto now requires approximately $105,000 down instead of $260,000. New Construction Buyers Double benefit: Access both the $1.5 million limit AND 30-year amortization regardless of whether you're a first-time buyer. Repeat Buyers Looking at Resale No change: If you've owned before and are buying a resale property over $1 million, you still need 20% down. Stress Test Still Applies These changes don't affect the mortgage stress test. You must still qualify at the higher of: Your contract rate plus 2%, OR The Bank of Canada benchmark rate (currently 5.25%) This means even with 30-year amortization, you need sufficient income to qualify at the stress test rate. When Do These Changes Take Effect? Announced: September 16, 2024 Effective date: December 15, 2024 If you're planning a purchase, you can start factoring these rules into your planning now. Get pre-approved to lock in your rate. What This Means for the Housing Market Potential Benefits More first-time buyers can enter expensive markets Increased demand for new construction (supporting supply goals) Lower monthly payments improve cash flow for young families Potential Concerns Could fuel further price increases in competitive markets Higher 30-year amortization costs more interest long-term May encourage buyers to stretch beyond comfortable budgets Next Steps These changes create meaningful opportunities for first-time buyers and those interested in new construction. If you've been saving for a down payment and felt priced out of your market, it's worth recalculating your options with our affordability calculator. Get pre-approved today to see how much home you can afford under the new rules. Ready to Get Started? Contact us today for personalized mortgage advice and competitive rates. Get Pre-Approved Call (416) 822-7357 Frequently Asked Questions Who Qualifies for the $1.5 Million Limit? The expanded $1.5 million insured mortgage limit applies to two groups: If you've never owned a home (or haven't owned in the past 4 years), you can now purchase homes up to $1.5 million with less than 20% down payment. Use our affordability calculator to see your maximum purchase price. Example: A first-time buyer purchasing a $1.4 million home now needs: 5% on first $500,000 = $25,000 10% on remaining $900,000 = $90,000 Total down payment: $115,000 (8. Who Still Follows the $1 Million Limit? The original $1 million limit remains for: Repeat buyers purchasing resale homes: If you've owned before and are buying an existing (not new) home over $1 million, you need 20% down Investment properties: No change—investment properties always require 20% minimum down payment Refinances: CMHC insurance doesn't apply to refinancing When Do These Changes Take Effect? Announced: September 16, 2024 Effective date: December 15, 2024 If you're planning a purchase, you can start factoring these rules into your planning now. Get pre-approved to lock in your rate.
