Homeownership made easier with recent changes

Here are the key takeaways from the resent public release from the Department of Finance. The following change will be effective as of December 15, 2024:

• Increasing the $1 million price cap for insured mortgages to $1.5 million. This will allow those to purchase a home for under 1.5 million with less than 20% down payment. See below:

  • 5% of the 1st $500K = $25,000

  • 10% of anything over $500K that to a max of 1.5million (previously 1million)

  • So if one was to purchase a house for 1.5million the minimum down payment required would be $125,000

  • **This is not just for First Time Buyers

  • ***Must be owner occupied

• Extending the Mortgage amortization from 25 to 30 years for all first-time homebuyers and/or the purchase of a new build

  • This will allow first time buyers to purchase at a higher price point as it will reduce the required mortgage payments

  • Remember this doesn't just apply to First Time Buyers but also those who are purchasing a newly built home that has not yet been occupied.

    
    
    
    

Recap on other recent changes:

Switch mortgage at renewal without having to qualify at the stress test

Thos with an insured mortgage (typically those that purchased with less than 20% down payment) can now switch their mortgage at renewal without having to qualify at the mortgage stress test. This will allow for more competitive options being made available at renewal.

Launched the Tax-Free First Home Savings Account

Allows Canadians to contribute up to $8,000 per year, and up to a lifetime limit of $40,000, towards their first downpayment. Tax-free money in and tax-free money out. Learn More

Enhanced the Home Buyers’ Plan limit from $35,000 to $60,000

The Home Buyers’ Plan enables Canadians to withdraw from their RRSP to buy or build a home and can be combined with savings through the Tax-Free First Home Savings Account. Learn More

You can use up to $60,000 of your RRSP savings ($120,000 for a couple) to help finance your down payment on a home.

• It might possibly allow you to accumulate the 20% down payment needed to avoid having to pay default insurance premiums.

• Your $60,000 RRSP contribution will count as a tax deduction for that year.

• You will not be taxed on the amount you withdrawal if you pay it back within 15yrs

• You will have a 5yr grace period before the repayment has to start.