Positive News for First-Time Home Buyers

1. The Canadian government will now allow for 30-year amortization periods on insured mortgages ( less than 20% down payment ) for first-time home buyers purchasing newly built homes. Until now the max amortization period was 25 years. This will take effect Aug 1, 2024.

Let's look at an example of the difference:

Current rules: Client income is $155,000, they can buy for $700,000 with $70,000 ( 10% ) down payment and borrow $630,000 + insurance. Assuming a $400/mo strata fee, $2000/yr in property taxes, minimal debt.

As of Aug 1: Same $155,000 income, strata, taxes and minimal debt, they can go upto a $750,000 purchase price with $75,000 ( 10% down ) and borrow $675,000 + insurance.

That shows how their buying power increases. However, even if they bought at the same price as example 1, they would have a lower mortgage payment based on the longer amortization in that example - about $300/mo lower.

So why only on newly built homes? Our thoughts are:

• To encourage builders to continue to build more as potentially more buyers enter.
• Mitigate the small percentage of people who cannot now qualify to complete the pre-sale they bought a few years ago.

2. Starting April 16, 2024, first-time home buyers can withdraw up to $60,000 from an RRSP towards the down payment on an owner-occupied purchase. Currently, a max of $35,000 can be applied.

3. People who have already, or plan to withdraw from an RRSP between the dates of Jan. 1, 2022, and Dec. 31, 2025, are getting more time to begin repayment - up to five years in total rather than two.