The Canadian government has announced big news regarding first-time homebuyers and insurance limits. This announcement may impact your ability to purchase a home with less than a 20% down payment.

Higher Maximum Purchase Price for Low Down Payments

The federal government increased the maximum purchase price for homes that qualify for a down payment of less than 20%. Since 2012, there has been a cap of $1 million on homes eligible for a low down payment, meaning that if you wanted to put down less than 20%, you had to buy a property priced at $999,999 or less.

Now, the limit is being raised to $1.5 million. While this might seem like a lot of money, this is a game-changer, especially in high-cost areas like Toronto and Vancouver, where most homes near the price of $1.5 million.

What This Insurance Change Means for Edmonton Homebuyers

Here in Edmonton, this change might not have as significant of an impact. With average home prices ranging from $400,000 to $500,000, the raised limit isn’t something most first-time buyers will encounter. In fact, homes priced at $1.5 million are relatively rare in our market.

However, if you’re looking for a luxury home or a unique property, this new rule could provide more flexibility in your purchase options. For most Edmonton buyers, though, the average home price means the previous limit was already sufficient.

How the Insurance Change Affects Toronto and Vancouver

The impact of this change will be strongest in markets like Toronto and Vancouver, where even a modest home can easily surpass the old $1 million limit.

The concern is that raising the insurance limit may push first-time buyers into mortgages that are difficult to sustain. For example, a mortgage on a $1.5 million home could mean monthly payments of $7,000. This is far from affordable for the average Canadian family.

What Does This Mean for Affordability?

While this change might help some buyers enter the market, it doesn’t address the root problem of high home prices in major cities. In Edmonton, where housing is still relatively affordable, this new rule is will not make much of an impact. However, it does highlight the broader issues in Canada’s housing market, where prices in cities like Toronto and Vancouver are out of reach for many first-time homebuyers.

Please reach out with any questions regarding the Canadian government’s announcements. If you’re looking to get pre-approved for a mortgage to buy a property in Edmonton, fill out my online application. I’m here to help you every step of the way.

About Jason Scott, Edmonton Mortgage Broker

Looking for a personalized mortgage solution? As an Edmonton Mortgage Associate, I’ll be your trusted partner who will help you get the right mortgage for your family home or Investment property. I’m Jason Scott, and I’ll be your Mortgage Broker in Edmonton.