Insured Mortgage Rule Changes
January 11, 2025 | Posted by: Christopher Chanakos
| New Insured Mortgage Guidelines |
Government anounces price cap increase and 30 year amortization on insured mortgages.
As part of the changes, the federal government is raising the price cap for insured mortgages, increasing the limit from $1 million to $1.5 million. This allows buyers within that range to qualify for high loan-to-value mortgage insurance, provided their loan-to-value ratio is at least 80%.
The government confirmed that the down payment structure will remain unchanged for loans under the new price cap, requiring:
- 5% for the portion of the purchase price up to $500,000, and
- 10% for the portion between $500,000 and $1.5 million.
This change is particularly significant for buyers in major urban markets like Toronto and Vancouver, where home prices often exceed the previous $1-million cap.
These details confirm that starting December 15, buyers will be able to purchase a $1.5-million home with just a $125,000 down payment, a significant reduction from the current $300,000 requirement for uninsured borrowers.
Expanding eligibility for 30-year amortizations
Another key change is the expansion of 30-year amortization periods for insured mortgages. This longer amortization option will now be available to all first-time homebuyers and those purchasing new builds, provided the loan-to-value ratio is 80% or higher.
Eligibility for first-time homebuyers includes the following criteria:
- The borrower has never purchased a home before.
- The borrower has not owned or occupied a principal residence in the last four years.
- The borrower has recently experienced a breakdown in a marriage or common-law relationship, in line with the Canada Revenue Agency’s approach to the Home Buyers’ Plan.
For new builds, the home must not have been previously occupied, though newly constructed condominiums with interim occupancy periods will still qualify.
The goal of this change is to make homeownership easier by giving buyers the option for lower monthly payments with longer amortization periods, helping to ease the burden of today’s high interest rates.
These reforms are set to apply to all high-ratio mortgages on properties that are owner-occupied or occupied by a close relative. The government also emphasized that the current eligibility criteria for government-backed mortgage insurance will remain in place.
Lenders and insurers will be able to offer mortgages under these new rules starting December 15, 2024, and prospective buyers can begin submitting applications to insurers from this date onward.
|
| New Insured Mortgage Guidelines |
Government anounces price cap increase and 30 year amortization on insured mortgages.
As part of the changes, the federal government is raising the price cap for insured mortgages, increasing the limit from $1 million to $1.5 million. This allows buyers within that range to qualify for high loan-to-value mortgage insurance, provided their loan-to-value ratio is at least 80%.
The government confirmed that the down payment structure will remain unchanged for loans under the new price cap, requiring:
- 5% for the portion of the purchase price up to $500,000, and
- 10% for the portion between $500,000 and $1.5 million.
This change is particularly significant for buyers in major urban markets like Toronto and Vancouver, where home prices often exceed the previous $1-million cap.
These details confirm that starting December 15, buyers will be able to purchase a $1.5-million home with just a $125,000 down payment, a significant reduction from the current $300,000 requirement for uninsured borrowers.
Expanding eligibility for 30-year amortizations
Another key change is the expansion of 30-year amortization periods for insured mortgages. This longer amortization option will now be available to all first-time homebuyers and those purchasing new builds, provided the loan-to-value ratio is 80% or higher.
Eligibility for first-time homebuyers includes the following criteria:
- The borrower has never purchased a home before.
- The borrower has not owned or occupied a principal residence in the last four years.
- The borrower has recently experienced a breakdown in a marriage or common-law relationship, in line with the Canada Revenue Agency’s approach to the Home Buyers’ Plan.
For new builds, the home must not have been previously occupied, though newly constructed condominiums with interim occupancy periods will still qualify.
The goal of this change is to make homeownership easier by giving buyers the option for lower monthly payments with longer amortization periods, helping to ease the burden of today’s high interest rates.
These reforms are set to apply to all high-ratio mortgages on properties that are owner-occupied or occupied by a close relative. The government also emphasized that the current eligibility criteria for government-backed mortgage insurance will remain in place.
Lenders and insurers will be able to offer mortgages under these new rules starting December 15, 2024, and prospective buyers can begin submitting applications to insurers from this date onward.
|
New Insured Mortgage Guidelines - Great News for Homebuyers.
As of December 15th, 2024, the federal government is expanding eligibility for 30-year amortizations for insured mortgages to all first-time homebuyers and all purchasers of new builds, and increasing the $1 million price cap for insured mortgages to $1.5 million, effective December 15, 2024.
To be considered a first-time homebuyer, a borrower must meet one of the following criteria:
The borrower has never purchased a home before
In the last 4 years, the borrower has not occupied a home as a principal place of residence that either they themselves or their current spouse or common-law partner owned; or,
The borrower recently experienced the breakdown of a marriage or common-law partnership. On this point, the regulations will follow the approach that the Canada Revenue Agency has taken with respect to the Home Buyers’ Plan.
Increasing the $1 million price cap for insured mortgages to $1.5 million
This measure would apply to all borrowers requiring high loan to value mortgage insurance in Canada and must satisfy the following requirements:
The total loan to value is greater than 80 per cent;
The value of the eligible residential property against which the loan is secured must be less than $1.5 million; and,
The downpayment requirements for the loan are as follows:
5% on the portion of a purchase price up to $500,000.
10% on the portion of a purchase price between $500,000 and $1.5 million.
These changes will allow Canadian homebuyers to access properties that will previously unattainable.
Back to Main Blog Page
