Recapping the Recent Changes to Down Payment Requirements and Extended Amortization
In This Blog:
With ongoing changes to legislation and a plethora of information at your fingertips, all of the options out there for first-time homebuyers can become overwhelming and convoluted. You might find yourself asking questions like “am I eligible for this program,” “is this initiative applicable to my location and specific situation” and “what does all this industry jargon even mean?”
We’re here to help! As we move into 2025, we’re outlining the new measures available to Albertans on their journey towards home ownership. From recent legislation to updates on existing policies, this blog covers the most important information you need to know about buying your first home.
New Price Cap for Insured Mortgages
An insured mortgage, in simple terms, is a mortgage where you make a down payment of less than 20% of the home’s purchase price. This requires you to have mortgage default insurance. Previously, this option was only available for homes under $1 million. However, Canada’s Federal Government has recently raised this limit to $1.5 million, which means buyers can now put down less than 20% on more expensive homes, significantly reducing the required down payment for higher-priced properties.
This change, which came into effect December 15, 2024, is primarily aimed at high-cost housing markets like Toronto and Vancouver, but it also applies to buyers in Alberta.
New Price Cap for Insured Mortgages
An insured mortgage, in simple terms, is a mortgage where you make a down payment of less than 20% of the home’s purchase price. This requires you to have mortgage default insurance. Previously, this option was only available for homes under $1 million. However, Canada’s Federal Government has recently raised this limit to $1.5 million, which means buyers can now put down less than 20% on more expensive homes, significantly reducing the required down payment for higher-priced properties.
This change, which came into effect December 15, 2024, is primarily aimed at high-cost housing markets like Toronto and Vancouver, but it also applies to buyers in Alberta.
Minimum Down Payment
| Minimum Down Payment | Old Rule | New Rule |
|---|---|---|
|
5% |
|
No change. |
|
5% on the first $500,000 + 10% on the rest |
|
|
|
20% |
Applicable to homes $1,000,000 and above. |
Applicable to homes $1,500,000 and above. |
Minimum Down Payment
Old Rule
New Rule
5 percent
Applicable to homes with a purchase price of $499,999 and below.
Example: $400,000 home requires a down payment of $20,000
No Change
Still applicable to homes with a purchase price of $499,999 and below.
5% on the first $500,000 + 10% on the rest
Applicable to homes between $500,000 and $999,999
Example: $1,400,000 home required a down payment of $280,000
Applicable to homes between $500,000 and $1,499,999
Example: $1,400,000 home now requires a down payment of $115,000.
20 percent
Applicable to homes $1,000,000 and above
Applicable to homes $1,500,000 and above
30-Year Amortization
Effective December 15, 2024, the federal government expanded the eligibility for 30-year mortgage amortizations to all first-time homebuyers and to all buyers of new builds. What does this do? Increasing the amortization on your mortgage means your payments will be smaller. This can help you qualify for a higher purchase price. It is important to note that this will also increase both your interest costs and total length of your debt repayment, putting you in more debt for longer.
To qualify as a first-time buyer, you must:
- Have not owned a home in the last four years; or
- Have owned a home in the last four years, but have experienced a breakdown in a marriage or common-law relationship and are leaving the home.
Our team firmly believes that purchasing your first home should be an exciting journey that isn’t weighed down by all the conflicting information out there. Understanding the details of these programs and initiatives can make a big difference in your financial planning. Since everyone’s situation is unique, we encourage you to reach out to our team for more personalized advice. Our consultations for residential purchases are always complimentary, and our team is happy to help. Your dream home is within reach, and we’re here to support you in making it a reality!
