Advocates have praised Ottawa’s decision to extend amortization periods on insured mortgages for certain buyers, but many say the change should be broader to make home ownership more attainable across Canada.
On Thursday in Toronto, Finance Minister Chrystia Freeland announced the federal government will permit 30-year amortization periods for insured mortgages taken out by first-time home buyers purchasing newly built homes. The new rule takes effect on Aug. 1.
Who can get a 30-year mortgage?
Under existing regulations, buyers with a down payment below 20% are limited to a maximum amortization period of 25 years on insured mortgages. The federal adjustment allows eligible first-time purchasers of newly built homes to stretch that amortization to 30 years, reducing monthly payments and easing initial affordability pressures.
“Faced with a shortage of housing options and increasingly high rent and home prices, younger Canadians understandably feel like the deck is stacked against them,” Freeland said in a news release. “By extending amortization, monthly mortgage payments will be more affordable for young Canadians who want that first home of their own.”
Mortgage Professionals Canada CEO Lauren van den Berg called the move a “step in the right direction,” noting the longer amortization should help level the playing field for first-time buyers. She said the change can expand housing opportunities and support economic recovery, but stressed it does not go far enough for many prospective buyers.
Van den Berg urged the government to consider making the 30-year option available to all Canadians purchasing any qualifying home, not only new construction. She pointed out that in dense urban areas such as Greater Vancouver and the Greater Toronto Area much of the new supply is vertical development, and access to new builds is uneven across the country.
Will it help first-time home buyers?
Reactions from mortgage and real-estate specialists were mixed. Victor Tran, a mortgage and real estate specialist at Ratesdotca, cautioned that the policy’s impact may be limited by the eligibility rules. He noted that, while insured mortgages are permitted for new builds, securing such financing is relatively uncommon in practice. Tran also highlighted that in markets where many homes exceed $1 million, buyers often require uninsured mortgages and therefore would not benefit from this specific change.
By contrast, the Canadian Home Builders’ Association welcomed the announcement as a potential “game changer.” CEO Kevin Lee said adding five years to amortization periods will improve affordability and help stimulate new construction. He argued the measure supports the government’s longer-term housing objectives and could assist the industry in meeting targets for new housing starts.
Supporters also suggested the policy could ease pressures on the rental market by enabling some renters to transition into ownership, although the degree of impact will vary by region and price point.
Changes to the RRSP Home Buyers’ Plan
Alongside the amortization change, Freeland announced an increase to the Home Buyers’ Plan (HBP) withdrawal limit from RRSPs. First-time buyers will be allowed to withdraw up to $60,000, up from $35,000, to put toward a home. That change is scheduled to take effect on April 16, the date of the federal budget release.
The government said the larger HBP limit reflects the reality that down payments are bigger and take longer to save for than in the past. In addition, people who have withdrawn or will withdraw funds between Jan. 1, 2022, and Dec. 31, 2025, will get more time to begin repayment—up to five years total rather than the previous two—giving new buyers more breathing room after purchase.
Ottawa emphasized these HBP adjustments are intended to work in concert with the First Home Savings Account (FHSA) introduced last year. The FHSA allows prospective buyers to save for up to 15 years once an account is opened, with an annual deposit limit of $8,000 and a lifetime contribution cap of $40,000. Freeland noted more than 750,000 Canadians have opened an FHSA since the program launched, though widespread financial institution support only became available months after the program started.
The government also said it will update the Canadian Mortgage Charter to include an expectation that financial institutions offer permanent amortization relief for existing homeowners who meet certain eligibility criteria. That change is intended to enable eligible borrowers to reduce their monthly mortgage payments to a sustainable level for as long as necessary.
Read more about real estate:
- How much you need to earn to afford a home in Toronto and the GTA
- Mortgage affordability calculator
- Can you use the FHSA and HBP together?