Canada to Increase Mortgage Amortization for First Time Home Buyers

As of April 2023, in Canada, the maximum amortization period for a mortgage with less than a 20% down payment and hence requiring mortgage loan insurance (typically from the Canada Mortgage and Housing Corporation, CMHC) is 25 years. This is due to regulations meant to ensure financial stability and manage the risk associated with longer loan terms.

However, for mortgages that do not require mortgage insurance — typically those where the homebuyer makes a down payment of 20% or more of the home's purchase price — lenders may offer amortization periods up to 30 years or more. These longer amortization periods can lower monthly payments, making homeownership more accessible for some buyers, including first-time homebuyers, by spreading out the payments over a longer time.

For first-time homebuyers specifically, there are several programs and incentives in place to assist them in purchasing a home. These include the First-Time Home Buyer Incentive, which offers 5% or 10% of the home’s purchase price to put toward a down payment, thus lowering monthly mortgage costs. Additionally, first-time buyers can benefit from the Home Buyers' Plan, which allows them to withdraw up to $35,000 from their Registered Retirement Savings Plan (RRSP) to buy or build a qualifying home.

It's essential to stay updated with the latest policies and regulations, as the government occasionally updates these programs and eligibility requirements to reflect current economic conditions and housing market dynamics.

In recent news, as of April 11 2024, Canada announce that they will allow some first-time homebuyers to pay off their mortgages over 30 years instead of 25 years of newly built homes starting August 1st.

As to be proposed in the upcoming federal budget, this new rule will help younger consumers afford a monthly mortgage payments and encourage new supply.