Ottawa raises the insured mortgage cap to $1.5 million and expands 30-year amortizations

On September 16, 2024, Finance Minister Chrystia Freeland announced what the government called the boldest mortgage reforms in decades. Both main changes take effect on December 15, 2024.

What changes

• Insured mortgage cap: the maximum price for a home bought with an insured mortgage (less than 20% down) rises from $1 million to $1.5 million. The cap had not been adjusted since 2012.
• 30-year amortization: eligibility expands to all first-time homebuyers and all buyers of new builds, including condos. Since August 1, 2024, it had applied only to first-time buyers of new builds.
• Switching lenders: under the Canadian Mortgage Charter, insured borrowers can switch lenders at renewal without another stress test.

The government also released blueprints for a Renters’ Bill of Rights and a Home Buyers’ Bill of Rights, including measures against blind bidding.

What it means for Calgary buyers

Calgary’s August benchmark price was $601,800, so the higher cap matters mostly for buyers of larger detached homes between $1 million and $1.5 million, who can now buy with less than 20% down. The wider 30-year option matters more: first-time buyers of resale homes get lower monthly payments from December 15.

Maximum purchase price for an insured mortgage

How the rules evolve this year

The reforms build on steps announced in the spring. In April, Ottawa said Budget 2024 would allow 30-year insured amortizations for first-time buyers of newly built homes, and that rule took effect on August 1, 2024. It also raised the Home Buyers’ Plan limit from $35,000 to $60,000. The September announcement goes further: from December 15, any first-time buyer can choose a 30-year insured amortization on a resale home, and anyone buying a new build, including a condo, can do the same even if they have owned before.

What an insured mortgage is

Mortgage loan insurance lets buyers get a mortgage for up to 95% of the purchase price and still get a reasonable interest rate, even with a smaller down payment. Until now, homes priced at $1 million or more could not be bought with an insured mortgage, so buyers needed at least 20% down. Raising the cap to $1.5 million means a buyer of a $1.2 million home, for example, could qualify with less than 20% down. The government said the cap had not been adjusted since 2012.

Switching lenders at renewal

Under the strengthened Canadian Mortgage Charter from Budget 2024, people with insured mortgages can switch to another lender at renewal without passing the stress test again. The government said this increases competition and helps borrowers find the cheapest deal. For Calgary homeowners who bought with less than 20% down in recent years, this can matter more than the other changes.

The bills of rights

The government also released blueprints for a Renters’ Bill of Rights and a Home Buyers’ Bill of Rights. It is asking provinces and territories to adopt measures such as protection from renovictions and blind bidding, standard lease agreements and sales price history on title searches, and is linking these talks to the $5 billion available through the Canada Housing Infrastructure Fund. In Alberta, any such change would need provincial action.

In Calgary, CREB reported 4,487 homes for sale in August 2024, the most supply since the end of 2022. Buyers who plan to use the new 30-year option on a resale home should wait until December 15 to close, or confirm with their lender which rules apply on their closing date. A longer amortization lowers the monthly payment but increases total interest, so compare both numbers before you choose.

The government said it will bring forward regulatory amendments to put these changes in place, with more details to come in the following weeks.