Mortgage reforms: towards easier access to home ownership for Canadians

As of December 15, Canadians will find it easier to buy a home, thanks to two new reforms implemented by the federal government. These measures will raise the ceiling on mortgage loans and increase the repayment period on mortgage loans.

In this article, our Montreal real estate brokers explain the main changes that will help Canadians acquire property.

Housing plan and mortgage reforms

In recent years, the dream of owning a home in Canada has become increasingly difficult for many Canadians, especially young adults. To remedy this situation, the federal government has announced the construction of 4 million new housing units, as well as the introduction of two mortgage reforms as of December 15, 2024, which are just some of the initiatives being put in place. Federal Finance Minister Chrystina Freeland has announced that these new measures are designed to create intergenerational equity. The new mortgage reforms consist of:

1. Increase the price ceiling from $1 million to $1.5 million for insured mortgages.
2. Extend eligibility for 30-year mortgage amortization to all first-time and newly built homebuyers.

“We’re raising the ceiling on insured mortgages to take account of property prices in more expensive cities. Also, people who buy a property have more time to repay their mortgage. […] These are measures aimed at creating equity between generations.” – Chrystina Freeland, Federal Minister of Finance

Price ceiling increased from $1 million to $1.5 million for insured mortgages

Mortgage loan insurance is mandatory when you want to buy a property with a down payment of less than 20% – the guarantee covers down payments between 5% and 20%. This guarantee allows Canadians to obtain a mortgage of up to 95% of the price of the property, at a reasonable interest rate, even if the down payment is lower. This will provide stability to the mortgage market, and also offers protection to the lender in the event that the buyer is unable to make mortgage payments.

At present, mortgage loan insurance applies only to properties of $1 million or less. However, as of December 14, 2024, mortgage loan insurance will be eligible for properties up to $1.5 million. The amount attributed to mortgage properties ranging from $1 million and under had not been modified by the Government of Canada since 2012. By increasing this limit, the federal government is adjusting the housing plan to current financial realities and market prices. This reform will enable more people to qualify for mortgage loan insurance.

30-year depreciation eligibility extended to all first-time buyers

As of December 15, anyone buying their first property or a newly-built property will be able to amortize their mortgage over 30 years. For a property to qualify as new construction, it must not have been used as a residence before. To qualify, you must meet one of the following criteria:

1. You have never previously purchased a property;
2. In the last four years, you have not occupied a property that you or your spouse owned;
3. You have recently experienced the end of a marriage or civil union. To this extent, the regulations adopt the Canada Revenue Agency’s approach to the Home Buyers’ Plan. This program allows you to withdraw funds from your Registered Retirement Savings Plan (RRSP) to buy or build a home.

These two reforms have two main objectives: (1) to enable buyers to reduce their mortgage payments on a monthly basis, thereby making home ownership more affordable, and (2) to encourage the construction of new buildings. To be considered a new property, the real estate must not have been occupied for residential purposes.

All in all, this adjustment in the housing plan is an opportunity for Canadians, and demand for real estate should increase dramatically. We invite you to contact our brokers today to start your search for your first property.