Navigating the New Mortgage Rules: A Guide for Calgary Buyers

New Mortgage Reforms

The dream of homeownership is now more attainable for first-time home buyers in Calgary, thanks to new mortgage reforms introduced by the Canadian federal government. Effective December 15, 2024, these changes aim to make down payments and monthly mortgage payments more affordable, opening the door to homeownership for more Canadians.

One of the most significant changes is the introduction of 30-year amortizations for all first-time home buyers and buyers of new builds. Choosing a 30-year mortgage instead of a 25-year mortgage can significantly lower monthly mortgage payments, as the loan amount is spread over a longer period. This reduction in monthly costs makes homeownership more manageable, particularly for those early in their careers or balancing other financial commitments. However, while monthly payments are lower, the total interest paid over the life of the loan will be higher with a 30-year mortgage compared to a 25-year mortgage.

For example, if a homebuyer purchases a house for $600,000 with a 10% down payment and secures a 4.89% interest rate, their monthly payments could differ by approximately $260 per month depending on the mortgage term. Extending the repayment period eases the financial burden, making homeownership more accessible.

In addition to these new reforms, insured mortgage holders can now switch lenders at renewal without undergoing another mortgage stress test. This change allows buyers to secure the best mortgage rates and terms without the added pressure of re-qualifying.

First Home Savings Account

Introduced in 2023, the First Home Savings Account (FHSA) helps first-time home buyers in Calgary save for a down payment. This registered savings plan allows tax-free contributions of up to $8,000 per year, with a lifetime contribution limit of $40,000.

According to the Government of Canada, an individual qualifies as a first-time home buyer for FHSA purposes if they have not lived in a qualifying home as their principal residence, either owned individually or jointly, in the current calendar year or the preceding four years.

To make a qualifying withdrawal, the following conditions must be met:

• The individual must be a first-time home buyer.
• A written agreement must be placed to buy or build a qualifying home, with the completion date before October 1 of the following year.
• The home must not have been acquired more than 30 days before the withdrawal.
• The individual must be a Canadian resident from the first withdrawal until the home is acquired.
• The home must be intended as a principal residence within one year of purchase.
• A government form must be completed to process the withdrawal.

For more information on the First Home Savings Account, visit the official government website.

Home Buyers’ Plan

The Home Buyers’ Plan (HBP) allows individuals to withdraw funds from their Registered Retirement Savings Plans (RRSPs) to purchase or build a qualifying home. In April 2024, the maximum withdrawal limit increased to $60,000, up from $35,000. Withdrawn amounts must be repaid within a 15-year period.

To qualify for the HBP, individuals must:

• Be a first-time home buyer (unless purchasing for a disabled person).
• Have a written agreement to buy or build a qualifying home.
• Be a Canadian resident from the time of withdrawal until the home is purchased.
• Intend to occupy the home as a principal residence within one year of purchase.

Home buyers can withdraw funds from both their RRSP and FHSA for the same home, provided they meet all conditions. However, funds transferred from an FHSA to an RRSP cannot be used for the HBP, nor can HBP withdrawals be repaid into an FHSA.

Finding the Right Home in Calgary

At Cedarglen Homes, these mortgage reforms represent new opportunities for first-time home buyers in Calgary. The team is dedicated to guiding buyers through these changes and helping them find the perfect home to match their needs and budget. With a variety of options, including paired homes, laned homes, and front-drive garage homes, Cedarglen Homes ensures a seamless and stress-free home-buying experience.

View Cedarglen Homes’ available models and quick possession homes and learn more about how Cedarglen Homes can assist in making homeownership a reality.