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
| Change | Previous Rule | New Rule |
|---|---|---|
| <strong>Insured Mortgage Limit</strong> | $1 million | $1.5 million (first-time buyers & new builds) |
| <strong>30-Year Amortization</strong> | Only new construction | All first-time buyers + new builds |
| <strong>Standard Limit</strong> | $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:
| Purchase Price | 25-Year Payment | 30-Year Payment | 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)
| Purchase Price | 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
| Purchase Price | 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:
| Down Payment | 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
FAQ
Q: I bought my first home 5 years ago. Am I a first-time buyer again?
A: No. The CRA's first-time buyer definition requires you to not have owned a home in the past 4 years. At 5 years, you would qualify again for first-time buyer programs.
Q: Can I use 30-year amortization with 20% down?
A: Yes, but you don't need CMHC insurance with 20% down. Uninsured mortgages have always allowed 30-year amortization.
Q: Do these rules apply to all three mortgage insurers?
A: Yes. CMHC, Sagen, and Canada Guaranty all follow the same insurable mortgage regulations.
Q: Is there a maximum household income to qualify?
A: No income cap exists for these expanded limits. The 30-year amortization for first-time buyers also has no income restriction.
Q: What about secondary suites or rental units?
A: If you're purchasing a property with rental income and will live in it as your primary residence, you may still qualify. Investment-only properties don't qualify.
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.
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