Canada’s New Mortgage Rules Explained: $1.5M Cap & 30-Year Amortization for Homebuyers

The Real Estate and Mortgage Show

👋 **Hello everyone!**

Today, we’re diving into some significant changes to Canada’s mortgage rules that could have a major impact on homebuyers, especially in high-cost markets like 🏙️ Toronto and 🏔️ Vancouver.

The federal government has announced an increase in the **CMHC-insured mortgage cap** from $1 million to **$1.5 million**, along with the expansion of **30-year amortizations** for first-time homebuyers. 🏡 Let’s break down what this means for you.

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📅 **Starting December 15, 2024**

The maximum purchase price for an insured mortgage will be raised to $1.5 million. This is a big deal, especially for those looking to buy in expensive cities where the average home price often exceeds $1 million.

✨ **Benefits:**

- Lower down payment required—just **5%** on the first $500,000 and **10%** on the remaining value.

- For a $1.5 million home, that’s a minimum down payment of **$125,000**, significantly lowering the barrier to entry for many prospective buyers.

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🔍 **Implications of the Increased Cap**

This increased cap is designed to help more Canadians, particularly in high-priced markets, qualify for insured mortgages. It could open up more opportunities to purchase semi-detached or detached homes 🏠 instead of being limited to condos.

⚠️ However, there are concerns this could drive up prices as more buyers compete for the same properties.

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📏 **30-Year Amortizations Explained**

Another major change is the extension of **30-year amortizations** to all first-time homebuyers, not just those buying new builds.

💡 **What this means:**

- **Lower monthly payments**

- Potentially easier qualification for those struggling with the mortgage stress test

For example:

On a $500,000 mortgage at a 5% interest rate, a 30-year term reduces monthly payments by around **$224** compared to a 25-year term.

💸 **Note:** While monthly payments are lower, you’ll pay more in interest over the life of the loan.

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🏗️ **Broader Housing Challenges**

These changes come as Canada faces significant challenges with **affordability** and **supply shortages**. While the government’s broader plan aims to build nearly **4 million new homes**, experts caution that increasing access to larger mortgages could push home prices higher in the short term.

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💬 **Final Thoughts**

These reforms are some of the most significant changes to Canada’s mortgage rules in decades. They’re designed to help more Canadians afford their first home, but as with any policy change, they come with both **opportunities** and **risks**.

📞 If you’re thinking about buying a home or have questions about how these new rules might impact you, reach out to **Karen Monteiro**, Principal Broker with Mortgage Alliance Greater Golden Horseshoe.

📲 **Contact Karen:**

📞 519-590-6847

📧 [e-mail]

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🙌 **Thanks for watching!**

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