With the announcement of Canada’s new mortgage regulations, prospective homebuyers, especially those eyeing new developments, are afforded several new advantages. Recent reforms aim to make homeownership more attainable, particularly in the new construction sector.
In this article, you will learn about:
- The extended amortization options for new development purchases
- Increased insured mortgage caps and their implications
- New refinancing opportunities for adding secondary suites
Let’s explore the key changes and how they impact buyers of new developments.
Introduction to Canada’s 2024/25 Mortgage Rules for New Development Buyers
In late 2024, Canada introduced significant changes to its mortgage rules, aiming to improve housing affordability and accessibility, especially for buyers interested in new developments. These updates reflect the government’s focus on supporting first-time homebuyers, increasing housing supply, and addressing the challenges of a growing real estate market.
Key reforms include extended amortization periods, higher insured mortgage caps, and new refinancing options to encourage secondary suite development. Whether you’re purchasing a pre-construction condo or a newly built single-family home, understanding these rules can help you make informed financial decisions. As new community builders, we answer your frequently asked questions regarding the new mortgage rules and how they affect new developments below.
1. What are the recent changes to mortgage amortization periods for new development purchases?
As of December 15, 2024, the Canadian government has expanded eligibility for 30-year amortization periods to all first-time homebuyers and purchasers of new builds. This extension from the previous 25-year maximum allows buyers to reduce their monthly mortgage payments, making new homes more affordable upfront.
2. How has the insured mortgage cap changed, and what does it mean for buyers?
The insured mortgage cap has been increased from $1 million to $1.5 million, also effective from December 15, 2024. This change enables buyers to qualify for mortgage insurance on homes priced up to $1.5 million, allowing for lower down payments and broader access to financing for higher-priced new developments. This change was brought about as house prices have continued to rise over the past decade.
3. Are there new refinancing options available for adding secondary suites to new homes?
Starting January 15, 2025, homeowners can refinance their insured mortgages to access up to 90% of their property’s value to fund the construction of secondary suites, such as basement apartments or laneway homes. This initiative aims to increase housing density and provide additional income opportunities for homeowners without the barriers of the past.
4. Do these changes apply to all buyers or only first-time homebuyers?
The 30-year amortization extension applies to all first-time homebuyers and purchasers of new builds, regardless of whether they are first-time buyers. New builds include any brand-new development, whether it’s a single-family home, row house or condo.
The increased insured mortgage cap is available to all buyers meeting the necessary criteria, not just first-time purchasers.
5. How do these changes affect the minimum down payment requirements?
With the increased insured mortgage cap, buyers can now purchase homes up to $1.5 million with a minimum down payment of 5% on the first $500,000 and 10% on the portion above $500,000. Homes priced above $1.5 million still require a minimum 20% down payment. In the past, a lower threshold meant more needed to be put down to qualify. A 50% increase on the cap allows more buyers into the market.
6. What is the rationale behind these mortgage reforms?
The government aims to make homeownership more accessible, particularly for younger Canadians and those purchasing new constructions (thereby also incentivizing new construction to address a mounting housing crisis). By extending amortization periods and increasing the insured mortgage cap, monthly payments become more manageable, more individuals and families qualify for lending, and buyers have greater flexibility in financing their homes.
7. Are there any potential drawbacks to these changes?
While these reforms lower monthly payments, extending the amortization period results in paying more interest over the life of the mortgage. Additionally, increasing borrowing capacity could contribute to higher home prices if demand outpaces supply. Ultimately, these changes raise household debt, though the hope is it can be manageable over longer timespans.
8. How can buyers of new developments best take advantage of these changes?
Prospective buyers should assess their financial situations to determine the optimal amortization period and down payment strategy. Consulting with mortgage professionals can provide personalized guidance to maximize the benefits of these new regulations when purchasing a new development property.
9. How do the new mortgage rules affect down payment requirements for new developments?
While the minimum down payment percentages remain the same, the increase in the insured mortgage cap to $1.5 million allows buyers to put down as little as 5% on homes priced up to this new limit. Previously, homes over $1 million required a 20% down payment without access to mortgage insurance. This change makes it easier for buyers to enter the market for higher-priced new developments with lower upfront costs.
10. Are there any changes to the mortgage stress test for new development buyers in 2025?
As of 2025, the mortgage stress test remains in place; however, there’s a notable adjustment for insured mortgages on new builds. First-time buyers purchasing newly constructed homes can now qualify under slightly more flexible criteria, with lenders allowed to consider extended amortization periods in affordability calculations. This change can improve borrowing power without compromising financial safeguards.
Explore Home Ownership with a New Development Today
At DeSozio Homes, we are committed to helping you take advantage of these changes to secure the best financing options for your new home. Our latest community, Harmony on Twenty, offers modern designs and spacious lots, providing the perfect setting for your family’s growth. With many more new developments in the works, we are sure we can build something for everyone.
Contact our Sales Centre today to discuss your options!
