Last week, the federal government announced new mortgage approval rules aimed at making mortgages more affordable for Canadians.
First, as of December 15, 2024, the purchase price threshold for insured mortgages will increase from $1 million to $1.5 million. This means that if you’re purchasing a home for $1.5 million or less, you will no longer be required to have a minimum 20% down payment. The previous threshold for insured mortgage was $1 million. This is the first change to purchase price cap for insured mortgages since 2012.
While this change will benefit some individuals, there are important factors to consider. A higher insured mortgage value means higher insurance premiums, which could impact affordability. Additionally, to take full advantage of this new threshold, you would need to qualify for a $1.5 million mortgage, which currently requires a household income of around $300,000.
30-Year Amortization
Secondly, as of December 15, 2024, eligibility for 30-year mortgage amortizations will be expanded. This will now include all first-time homebuyers, regardless of the type of property purchased, as well as all buyers of new construction homes. While this will help reduce monthly payments, it will also increase the total interest paid over the life of the mortgage.
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