Effective TODAY, August 1st 2024, First Time Homebuyers (FTHB) purchasing a newly built property and who meet the FTHB criteria, have the option of a 30 year Amortization (AM) for insured mortgages.
Previously, the maximum AM was 25 years for insured mortgages.
WHAT DOES THIS ACTUALLY MEAN?
If you are buying a new construction home with less than 20% down, the mortgage amount you can qualify for will be roughly 5-6% higher with a 30AM vs a 25AM. The purchase price of your home can also be about 6% higher with this new policy.
EXAMPLE:
$700,000 Purchase price with 15% down paymentMaximum mortgage with 25-year AM = $595,000Maximum mortgage with 30-year AM = $630,000 (roughly 6% more)You can buy a $700,000 home with 10% downOR
You can buy a $745,000 home with 15% downTo map out scenarios that are specific to you, contact me today!
Mini Rant: This new mortgage rule is all over the news today however, that’s a lot of hype. Downfalls of new construction are that the properties usually have not been MPAC assessed and as such we need to use 1% of the purchase price as a place holder for Property Taxes. This eats up a lot of borrowing power. Sadly, this new mortgage rule will do very little to help first time buyers and it doesn’t do anything to solve the affordability or inventory crisis in Canada. Hopefully it’s a sign of more significant policies and solutions to come!
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