New 2024 Federal Budget Initiatives Poised to Help First Time Home Buyers

Those entering the home buying market for the first time are about to see some help from Federal government initiatives. These proposed measures are meant to bolster purchasing power of first-time home buyers and make home ownership dreams more accessible. 

Extended Amortization Periods for New Builds

One of the major changes comes in the form of an extension to the maximum amortization period for insured mortgages. This was previously capped at 25 years but now, for those First-Time Home Buyers purchasing new builds only, there is the option to extend for an additional 5 years, lowering monthly payments but increasing the overall amount paid in interest. The likelihood is this will apply mostly to condo or townhouses as this is typically what first time home buyers enter the market with, but it also applies to single family homes and other new build dwellings. 

Increased Limits on RRSP Withdrawals

In addition to extending the amortization period, the government has also increased the amount first time homebuyers can pull from their RRSPs to help with a down payment. Previously set at $35,000, buyers will now be able to access $60,000 if the funds are available in their RRSP. The repayment terms have stayed the same, however, with a small grace period and then a 15-year total repayment requirement, meaning purchasers who use RRSP funds will be required to replace the funds in yearly increments to avoid having the funds added on to their income for that year. 

Rental Payment History as an Assessment Factor in Mortgage Approvals

In an effort to broaden qualifying criteria, the Federal government has said it plans to amend the Canadian Mortgage Charter encouraging lenders to take rental payment history into consideration when reviewing for a mortgage approval. This may lead to more favourable financing terms, and a smoother transition from renting to owning for some.

These initiatives aim to lower entry barriers for first-time home buyers and stimulate the housing market by increasing the demand. However, with the current market having lower supply and less builds than previously, it may lead into a time of more competition until the time when builds can level out the supply issue. Buyers considering these new initiatives or starting their journey to home ownership for the first time should contact a knowledgeable mortgage broker to help them understand all the nuances of these changes as well as market conditions. iSask Mortgages is available to help bring clarity to the options available to first-time home buyers, refinances and renewals.