Real estate professionals may have buyer clients interested in longer mortgages to improve affordability, and may ask about Canada’s federal changes that took effect on December 15, 2024. These changes enabled amortization periods of up to 30 years for certain borrowers, expanding eligibility to all first‑time homebuyers (resale or new build) and all purchasers of new builds. This change is mainly meant to reduce monthly payments and support new home construction.

To qualify for a 30-year term, borrowers must meet specific criteria, including being a first-time buyer or purchasing a newly built home, and also meeting regular insurance requirements like a minimum 5% down payment a maximum home price of $1.5 million for purchase transactions; for refinances to add secondary suites, a separate insured‑refinance program (up to 90% of post‑renovation value, capped at $2 million) comes into effect on January 15, 2025. While a longer amortization lowers monthly payments by about 8 % to 10 % compared to a 25-year term, it also means paying more interest over time and building equity more slowly.

Real estate professionals should help clients evaluate whether the short-term savings align with long-term ownership or investment goals.

Eligibility and Conditions

Understanding client eligibility for a 30-year amortization helps when advising buyers and structuring offers in competitive markets.

First-Time Homebuyers or New-Build Purchasers

The client must have never owned a principal residence, or haven’t lived in one they owned in the last four years, or recently experienced a separation or divorce for at least 90 days. These rules follow CRA’s Home Buyers’ Plan definitions. This applies whether the client is buying a resale home or a new build.

Anyone buying a newly built home can qualify; this includes single-family houses, row homes, or condos, even if they are not a first-time buyer. The home must be brand new and never lived in. If the client is buying a pre-construction condo, interim occupancy still qualifies.

Mortgage Insurance

Loans with a down payment below 20% require mortgage loan insurance. This protects the lender if the client defaults.

Down Payment Minimums

Minimum down payments apply:

5% on the first $500,000 of the price
10% on the next $500,000
20% on any amount above $1 million

Maximum Insurable Amount

Up to $1.5 million for purchase mortgages, reflecting the December 15, 2024, expansion of the cap
Up to $2 million for insured refinances to add secondary suites (limited to 90 % of the post‑renovation value), under a program effective January 15, 2025

Stress-Test Approval

Borrowers applying for a new insured mortgage or a refinance must qualify at the greater of their contract rate plus 2 % or the Bank of Canada’s five‑year benchmark rate (currently 5.25%). However, when switching lenders at renewal, straight switches, in which the borrower transfers their existing insured mortgage to a new lender without increasing the outstanding balance or extending the remaining amortization, are exempt from a new stress test.

Insurance Premium Adjustment

Extending from 25 to 30 years adds roughly 0.20% to the insurance premium on the loan amount. Premiums vary by insurer, and this percentage can vary, so compare providers.

How a 30-Year Amortization Works

Spreading principal over 360 months instead of 300 reduces each payment. However, because the client pays more interest over the longer term, total interest charges can be 15% to 25% higher, depending on future rate changes. This makes scenario planning critical when helping clients determine whether to prioritize lower payments or faster equity gains.

Advantages and Disadvantages

Advantages

Lower Monthly Payments: Frees up cash flow for living expenses or other debts.
Easier Qualification: Smaller payments help a client pass the insurance stress test.
Supports New Home Supply: Encourages buyers of new builds, helping federal housing goals.

Disadvantages

Higher Lifetime Interest: The client will pay more in interest over the loan’s life.
Slower Equity Build-Up: It takes longer to build home equity, which can limit refinancing or selling flexibility.

Key Considerations

Compare Scenarios

Model monthly payments and total interest for both 25- and 30-year options at today’s rates.

Align with Goals

If the client plans to pay off the mortgage faster, a shorter amortization may be more appropriate.

Recommend Shopping Around

Small differences in rates or insurance premiums can have big effects over decades.

Plan for Renewals

Most mortgages renew every three to five years; longer amortizations can magnify future rate increases.

Estimate Equity Growth

If the client expects to refinance or sell within a few years, check how much equity they will accumulate under each term.