Effective December 15th, 2024, amortizations on insured mortgages will increase from 25 years to 30 years. Previously it was implemented just for a first-time home buyer but have now opened it up to everyone.
This move was implemented to increase affordability as well as lower the monthly payments on the mortgage.
Lower Mortgage Payments
Let’s just say you had a new mortgage of $500,000, your monthly mortgage payment would be approximately $2,778.49 with a 25-year amortization. If you extend the amortization on the same mortgage to 30 years, the new payment would be $2,532.73. This would effectively lower your monthly payments by $245.76 every month.
More Buying Power
For a household with a combined annual household income of $150,000 the maximum purchase price with the 25-year amortization period would be approximately $635,000. Now with a 30-year amortization with the same gross household income of $150,000, the maximum purchase price goes up to approximately $673,000, which represents an increase of $38,000.
Please note this change only applies to the purchase of a new construction home to be your primary residence. Application submitted prior to the implementation of the rule change on December 15th, 2024, will remain the same, cannot be extended without re-applying.
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