As of December 15th, 2024, several significant incentives are available to assist homebuyers in Canada, particularly first-time buyers.
In this blog we will go over the all the key programs that have been rolled out:
The 2 Big Changes:
1. Increased Insured Mortgage Cap: The insured mortgage limit goes up from $1M to $1.5M. This means buyers can get a mortgage with less than 20% down for homes up to $1.5M, as long as they meet federal requirements. Before this, anyone buying a home over $1M needed at least a 20% down payment, which made it harder to afford pricier homes. By raising the cap, the government is making higher-priced homes more accessible for middle-income buyers. This change is expected to boost activity in the mid-to-upper price ranges of the market.
2. Extended Mortgage Amortization Period: The government is giving first-time homebuyers and buyers of new homes the option to stretch their mortgage payments over 30 years. This will lower their monthly payments, making homeownership more affordable. While it means paying more interest in the long run, the immediate advantage is more manageable payments each month, helping buyers handle higher housing costs and stay on top of their finances.
1. Tax-Free First Home Savings Account (FHSA): The FHSA allows Canadians to contribute up to $8,000 per year, with a lifetime limit of $40,000, towards their first down payment. Contributions are tax-free, and withdrawals used for purchasing a first home are also tax-free.
2. Enhanced Home Buyers’ Plan (HBP): The HBP enables first-time homebuyers to withdraw up to $60,000 from their Registered Retirement Savings Plan (RRSP) to fund a down payment, an increase from the previous limit of $35,000. This can be combined with FHSA savings for a larger down payment.
3. First-Time Home Buyer Incentive (FTHBI): The FTHBI offers eligible first-time homebuyers a shared equity mortgage with the Canada Mortgage and Housing Corporation (CMHC). This program provides 5% of the home’s purchase price for resale homes and 10% for newly constructed homes, assisting with down payments.
By lowering upfront costs and monthly payments, these programs are intended to make homeownership more accessible. This will lead to a much more active real estate market for 2025, with climbing prices as a result of increased affordability and easier access for buyers. It will also be easier to purchase a home with the insured mortgage cap raised to $1.5M and 30-year mortgages being available to first-time buyers. It’s anticipated that demand for both new and resale homes is expected to increase as a result of initiatives like the FHSA, the updated HBP, and incentives for new construction. Altogether, these changes should boost buying activity, encourage new construction, and push prices higher, particularly for entry-level and mid-range homes. If you’re looking to get into the market, the prices we see today will be the lowest you’ll see them; don’t let the opportunity for home ownership pass you by in this “slower” season.
