Homebuyers Benefit From More Purchasing Power

 

1. Introduction of 30-Year Amortizations for Insured Mortgages

One of the most significant shifts this year is the introduction of 30-year amortizations for insured mortgages. This extension allows certain buyers to spread out their mortgage payments over 30 years instead of the previous 25-year maximum, increasing purchasing power. The 30 year option is in effect for all buyers purchasing new construction with less than 20% downpayment.  Effective December 15th, any first time buyers purchasing any home with an insured mortgage can benefit from the 30 year amortization.  This move aims to help Canadians qualify for larger loans while keeping their monthly payments more manageable, especially amid rising home prices and interest rates. These changes are designed to address affordability challenges. Homebuyers benefit from more purchasing power. Here’s a quick breakdown of the key changes: Homebuyers Benefit From More Purchasing Power and Homeowners Benefit From New Policies

For Insured Mortgage guidelines a first-time homebuyer must meet the following criteria:

-someone who has not owned a home in the past four years. This includes individuals who have never purchased a property or those who previously owned a home but have not done so within the last four years.

-Note: only one applicant needs to be a first time buyer to access the 30 year amortization

To qualify for certain first-time homebuyer programs, such as withdrawing from RRSP’s under the Home Buyers’ Plan (HBP), the individual must plan to live in the home as their primary residence.

2. Changes Insured Mortgage limit

Effective December 15, 2024 insured mortgages will be available up to a maximum purchase price of $1,500,000.00 ($1,499,999.99 to be exact). This is an increase from the previous limit of $1,000,000.00.  This will allow all buyers to have the option of purchasing with the minimum down payment, instead of requiring 20% on the purchase price. Minimum down payment for insured mortgages are 5% of the first $500,000 and 10% on the balance. For example, if you were buying for $1,500,000 before December 15th, the minimum down payment would be 20% of the purchase price, or $300,000. After December 15th you can buy with $125,000 down.

3. Changes to Home Buyers Plan  (RRSP)

Eligible first time home buyers can withdraw from their RRSP for a home purchase up to $60,000 (increased from $40,000). The money must be repaid to their RRSP over a 15 year period, (after a 5 year grace period) or else claimed as taxable income.

4. Property Transfer Tax Exemptions for First Time Buyers

Eligible first time buyers can purchase new construction without Property Transfer Tax up to $1,100,000.

On resale properties, buyers can enjoy full exemption up to $500,000 and a new partial exemption on houses priced between $500,000-$835,000.

5. Cancellation of First-Time Homebuyer Incentives

The federal government ended their First-Time Home Buyer Incentive (FTHBI) effective March 2024. There were not enough Canadians taking part in the program to make it worthwhile to continue to offer.

6. Stress Test – Renewals/Transfers

As of November 21, 2024, mortgage renewals can be transferred to a different lender without the stress test being applied. This means borrowers qualify at the contract rate instead of 2.0% above. Giving more options at renewal time.

Conclusion

The Canadian mortgage market in 2024 is marked by a combination of flexibility and tightening measures. While homebuyers benefit from more purchasing power through 30-year amortizations and revised stress test rules (when renewing), home owners benefit from new policies. These adjustments are reshaping the housing landscape and giving Canadians more options as they navigate a complex and evolving market.

Do you have a renewal coming up or want to see what these changes can mean for you? Give your Broker a call and we can answer any questions you may have.