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Federal government announces 30-year mortgage amortization & other housing affordability measures

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On Thursday, Deputy Prime Minister and Finance Minister Chrystia Freeland announced several housing affordability measures intended to help Canadians buy their first homes and help current homeowners afford what they have.


Affording a down payment


Effective April 16, the homebuyer’s plan withdrawal limit will increase from $35,000 to $60,000. This can be combined with a tax-free savings account. Freeland says this will give young Canadians more tools to save what’s actually required for a down payment on a home.

The government is also giving Canadians an extra three years to repay the amount they withdraw under the homebuyer’s plan. Those who made withdrawals from January 1, 2022, to December 31, 2025, will have five years before they need to start repayment.


Qualifying for a mortgage


Freeland points out that a big part of qualifying for a mortgage is ensuring its monthly payments can be made and that these costs are a significant barrier to homeownership for many young Canadians.

For this reason, she says, the government is announcing new enhancements to the Canadian Mortgage Charter, which outlines relief Canadians can expect from their banks if they’re in a challenging financial situation.


30-year amortization on mortgages for newly built homes


Effective August 1, 2024, Freeland says the government will allow 30-year amortizations on insured mortgages for first-time homebuyers purchasing newly built homes (including condominiums and townhouses). Currently, homeowners have up to 25 years to pay off their mortgages. This will mean lower monthly payments which will allow more younger buyers to get into the market.


CHBA’s take


The Canadian Home Builders’ Association (CHBA) welcomes this news. In fact, it says the association and its members have been looking for this very thing.

Kevin Lee, CHBA CEO, explains: “CHBA has been calling for 30-year amortization periods for insured mortgages for new construction because of the urgent need for much more new housing supply. This is a game-changer for those who have been struggling with housing affordability and growing inequities in mortgage access … The problem has been simple: if buyers cannot get a mortgage to buy a home, then builders cannot build.”

He notes the government’s recognition of the need to get first-time homebuyers into the market and that the move will support affordability and get more supply under construction.


Mortgage renewals and rates


The government also announced stronger measures through the Charter, with lenders having to contact borrowers up to 24 months in advance of a homeowner’s mortgage renewal. This will allow plenty of time to explore options and make informed decisions.

There will also be permanent amortization relief to all homeowners including insured homeowners at risk (without fees or penalties). The amortization extension is currently temporary for those in financial hardship, but it can now be made permanent so their monthly costs stay low for as long as needed.

“Canadians work really hard to buy and afford their homes, and it’s only fair that mortgage lenders should help Canadians do everything they can to afford their homes at a time of higher interest rates,” Freeland expresses.


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