2024 Federal Budget Announcements and Thirty Year Amortization Period

Finance Minister Chrystia Freeland announced April 11, 2024 that the federal government will allow a thirty year amortization period on insured mortgages for first-time homebuyers purchasing newly built homes. Some say expanding the policy to all Canadians would help make home ownership more affordable. The change takes effect Aug. 1, 2024.

Under the current rules, with a down payment less than 20 per cent of the home price, the longest allowable amortization is 25 years. Extending amortization, to a thirty year amortization makes monthly mortgage more affordable for young Canadians who want to buy their first home.

This will allow more opportunities for home ownership and will ultimately contribute to economic revival and economic recovery. Enabling some Canadians to stop renting and become homeowners.

First Time Home Buyers Withdrawal Plan – RRSP

Freeland also announced the government will raise the amount first-time homebuyers can withdraw from their RRSPs to $60,000 from $35,000 to buy a home. That will take effect April 16, 2024 the day the federal budget is set to be released. The size of a down payment and the amount of time needed to save up for one are much larger than they used to be. Withdrawals will also have an extended timeframe for repayment.

People who have made or will make withdrawals between Jan. 1, 2022, and Dec. 31, 2025, are also getting more time to begin repayment — up to five years rather than two. 

Ottawa said the changes are meant to work in tandem with the First Home Savings Account, which it launched last year. The rules governing that program allow prospective homebuyers to start saving for up to 15 years once they open an account, with an annual $8,000 (tax deductible) deposit cap and a lifetime contribution limit of $40,000. Unlike the RRSP First Time Home Buyers Withdrawal Plan, qualified withdrawals do not require repayment and are non-taxable.

Freeland said more than 750,000 Canadians have opened an FHSA to date. While the program came online April 1 of last year, most Canadian financial institutions only began offering the account as of last summer or fall.

Ottawa also announced changes to the Canadian Mortgage Charter that will include an expectation that financial institutions offer permanent amortization relief to protect existing homeowners who meet certain eligibility criteria.

That would allow eligible homeowners to reduce their monthly mortgage payment to a number they can afford for as long as needed.