30-Year Mortgage: New Rules to Make Home Ownership Accessible
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Since August 1, 2024, first-time buyers of newly built homes with an insured mortgage have been able to amortize their mortgage over 30 years. This measure was announced in the 2024 federal budget last spring. However, the federal government has just announced additional measures to ease mortgage rules and make homeownership more accessible. Starting December 15, 2024, all first-time buyers or buyers of newly built homes will now be able to amortize their mortgage over 30 years. In addition, Ottawa has also announced an increase to the price cap for insured mortgages. In this article, we explain these two changes.
Changes to Mortgage Rules
Canada’s Minister of Finance, Chrystia Freeland, announced two measures to ease mortgage lending rules:
- More flexible eligibility with 30-year mortgage amortization
- Raising the price ceiling on insured mortgages
Here’s more information on each of these changes.
Mortgages With 30-Year Amortization
As announced in the 2024 federal budget, first-time buyers of newly built properties with an insured mortgage can amortize their mortgage over 30 years as of August 1.
But as of December 15, eligibility for mortgages amortized over 30 years will be extended. All first-time or newly built home buyers will now be able to amortize their mortgage over 30 years.
In other words, 30-year mortgage amortization will no longer be limited to first-time homebuyers with a down payment of less than 20%. In other words, 30-year mortgage amortization will no longer be limited to first-time homebuyers with a down payment of less than 20%.
If needed, feel free to speak with an insurance agent or a broker such as ClicAssure.
Price Ceiling for Insured Mortgages
The second measure announced to facilitate access to home ownership concerns the price ceiling for insured mortgages.
The federal government has decided to raise the price ceiling for insured mortgages from $1 million to $1.5 million. This amount had not been adjusted since 2012. As of December 15, borrowers who do not have a minimum down payment of 20% (and who must have mortgage loan insurance) will be able to buy a property of up to $1.5 million.
Impact of 30-Year Mortgage Eligibility
In Ottawa, the Minister of Finance maintains that these measures are intended to stimulate supply by building new housing. But what is really happening?
Widening eligibility for 30-year mortgages will certainly increase buyers’ borrowing capacity. It will also reduce homeowners’ monthly payments, which is desirable given the high inflation of recent years.
But these measures could have the opposite effect… In fact, an increase in borrowing capacity will stimulate demand. In the absence of measures to increase supply, house prices could rise.
Plus, repaying a mortgage over a longer period will increase the total interest paid over the life of the mortgage. That said, don’t forget that amortization is the maximum term of a mortgage. But, you can reduce the term of your loan by accelerating repayment (or reducing amortization at mortgage renewal). In other words, you can’t lengthen a mortgage, but you can shorten it by accelerating repayment.
Finally, the key rate cuts of recent months (and those to come) could also have an impact on house prices. In this context, housing supply measures might have been preferable.
Compare Mortgage Rates in Canada
In addition to new rules to facilitate access to home ownership, mortgage rates have been reduced since the Bank of Canada announced its recent key rate cuts. If you need to renew your mortgage soon, you’ll have several options:
- Contact your bank to find out the best rate you can get (whether or not it’s a 30-year mortgage).
- Contact a mortgage broker like nesto to help you find the best mortgage rate.
- Compare mortgage rates from banks and other lenders with our mortgage rate comparator.
Frequently Asked Questions
Is it possible to repay a mortgage over a period longer than 25 years?
With a down payment of at least 20% of the purchase price, you can pay off a mortgage over a period longer than 25 years. As of December 15, all first-time and new home buyers will now be able to amortize their mortgage over 30 years.
Is a 30-year mortgage a good idea?
Taking out a 30-year mortgage increases your borrowing capacity and reduces your monthly payments. However, repaying your mortgage over a longer period will increase the total interest paid over the life of your mortgage.
What is the interest rate on a 30-year mortgage?
In Canada, you can obtain a mortgage with a 30-year amortization based on eligibility criteria. However, the interest rate varies according to the type of mortgage (e.g. fixed or variable), the term of the loan (e.g. 30 years), the term chosen (e.g. 5 years) and your financial situation (debt ratio, credit rating, etc.). To compare banks’ mortgage rates, try our mortgage rate comparator.
Who counts as a first-time buyer for a 30-year mortgage?
According to CMHC, you are a first-time buyer if you have never purchased a home in Canada. You also qualify if, in the current calendar year and the four preceding calendar years, you have not lived as your principal residence in a home owned by you or your current spouse or common-law partner. Living apart for at least 90 days after the breakdown of a marriage or common-law partnership can also make you eligible. Only one borrower needs to meet these criteria. In addition, a newly built home that has never been occupied qualifies for a 30-year amortization, even if you have owned a home before.
What down payment do you need for a home under $1.5 million?
The minimum down payment is 5% of the first $500,000, plus 10% of the portion of the price above $500,000. For example, a $1 million home requires at least $75,000 down ($25,000 + $50,000). At $1.5 million or more, mortgage loan insurance is no longer available and the minimum down payment rises to 20%, according to the Financial Consumer Agency of Canada.
Does a 30-year amortization cost more in mortgage insurance?
Yes, slightly. As of September 2026, with a down payment of 5% to 9.99%, the CMHC premium is 4.20% of the loan under CMHC Home Start with a 30-year amortization, compared with 4.00% for a standard insured mortgage amortized over 25 years. You also pay interest for five more years.
