Exciting changes are coming for first-time home buyers (FTHBs) in Canada! Starting December 15, 2024, new rules will allow first-time homebuyers to extend their amortization to 30 years.
This applies to those who put down less than 20%, making it easier for many Canadians to own homes. It lowers their monthly payments and helps them qualify for larger mortgages.
Excitement over New Mortgage Rules
The first time in over 14 years that the regulator has introduced mortgage rule changes to actually make it easier to buy a home has arrived. The last time it was possible to amortize a high ratio mortgage over 30 years was all the way back in 2008!
But what exactly qualifies someone as a first-time home buyer?
The obvious answer—if you’ve never owned a home, you are a first-time homebuyer (FTHB).
However, some special situations can reset your FTHB status.
Let’s break it down.
Who Qualifies as a First-Time Home Buyer?
1. You’ve never owned a home before.
If this is your first step into homeownership, congratulations—you’re an FTHB!
2. You haven’t owned a home in the past four years.
Even if you owned a home in the past, you can regain FTHB status if it’s been at least four years since you sold it.
3. You own a property but never lived in it.
If you’ve only owned a home as a rental property or co-signed for a family member, you could still qualify as an FTHB. Common scenario we see often is where a client has a rental property but has never occupied as their principal residence. Or another scenario is where you’ve signed to help family out with a mortgage but never lived in that property.
4. You’ve gone through a divorce or marital breakup.
If you’ve separated or divorced and your name has been removed from the title of the matrimonial home, you can be considered an FTHB again. No need to wait for the 4 year period to elapse. The moment your name is off title you may be considered a FTHB.
5. You’re buying with a partner or family member who isn’t an FTHB.
Even if your co-buyer doesn’t qualify, your FTHB status allows you to take advantage of the program. But careful – if you live with a spouse or common-law partner who owns their home and now you want to buy a home as a first time home buyer you’re outta luck. The moment you shack up with your partner who is a home owner you loose that first-timer status.
This is the definition for insured mortgages
There are other benefits and programs available to first time homebuyers. For example land transfer tax rebates. The definition of a first time home buyer being shared here is only for high ratio insured mortgages. I.E where you buy with less than 20% down payment and would like to amortize the mortgage over 30 years.
For more information about confirming if you are a first time home buyer for land transfer tax rebates or the FTHB RRSP withdrawal program please consult with your lawyer.
Why This Matters to First -Time Home Buyers
The ability to put down less than 20% and stretch your payments over 30 years can significantly ease the financial burden of buying a home, especially in today’s market. Understanding the rules about who qualifies as an FTHB can open doors for more Canadians to achieve their dream of homeownership.
If you’re planning to buy a home soon, these new rules could make all the difference.
A Warning About 30 Year Amortizations
Amortizing a mortgage over 30 years can lower your monthly payments, making homeownership more affordable in the short term, but it comes with significant long-term costs. The extended repayment period means you’ll pay more interest over the life of the loan compared to a shorter amortization period, potentially adding tens of thousands of dollars to the total cost of your mortgage.
For example, on a $400,000 mortgage at a 5% interest rate, choosing a 30-year amortization instead of a 25-year term could increase your total interest paid by over $70,000.
While the flexibility of smaller payments may help with budgeting in the short term, it’s important to weigh this against the added financial burden of higher overall interest costs.
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My name is Chris. I’m a 2nd generation Toronto mortgage broker. I’m using the experience and guidance I learned from my Dad gained over 40 years to help home buyers just like you make better mortgage financing decisions.
