Toronto – One of the biggest pressures on young Canadians right now is the difficulty of saving for a down payment and qualifying for an affordable mortgage. Chrystia Freeland, Deputy Prime Minister and Minister of Finance, announced Budget 2024 will include a number of enhancements to the Home Buyers’ Plan and the Canadian Mortgage Charter that will help put homeownership back within reach.
First, for Canadians saving up for a downpayment on their first home, Budget 2024 will propose to increase the Home Buyers’ Plan limit from $35,000 to $60,000. The Home Buyers’ Plan is an existing federal program that lets Canadians withdraw from their Registered Retirement Savings Plan (RRSP) to buy or build a qualifying home. Increasing the limit means that first-time home buyers will be able to use the tax benefits of RRSP contributions to save up to $25,000 more for their downpayment – in recognition of the fact the size of a downpayment and the amount of time needed to save up for a downpayment are much larger today.
The enhanced Home Buyers’ Plan will work in tandem with the government’s Tax-Free First Home Savings Account (FHSA) which allows Canadians to contribute up to $8,000 per year, and up to a lifetime limit of $40,000, towards their first downpayment. Only a year since its launch, today, the Deputy Prime Minister announced that more than 750,000 Canadians have opened a Tax-Free First Home Savings Account. Together, the enhanced Home Buyers’ Plan and the Tax-Free First Home Savings Account will help put the downpayment on a home back within reach.
Second, to help more younger Canadians afford that first home of their own, the Deputy Prime Minister announced that in Budget 2024 the government will allow 30-year mortgage amortizations for first-time home buyers purchasing newly built homes, effective August 1, 2024. Extending the amortization limit for insured mortgages by five years for first-time buyers purchasing new builds will enable more young Canadians to afford a monthly mortgage payment and will encourage new supply.
Third, the enhancements to the Canadian Mortgage Charter will also include an expectation that, where appropriate, permanent amortization relief will be made available to protect existing homeowners that meet specific eligibility criteria. Amortization relief means eligible homeowners can reduce their monthly mortgage payment to a number they can afford, for as long as they need to. “Amortization” refers to the length of time a homeowner has to repay their mortgage; amortization relief can lower mortgage payments by stretching out this length of time. Thanks to permanent amortization relief, those homeowners who are most at risk are now better positioned to stay in their home and retain control over these important life decisions.
Fourth, to further help recent and upcoming first-time home buyers, Budget 2024 will announce a proposal that Canadians who withdraw from their Home Buyers’ Plan between January 1, 2022 and December 31, 2025 will see their repayment grace period extended by three years. These first-time home buyers will now have up to five years before they need to start repayments—so they can focus on their mortgage payments and getting ahead.
To solve Canada’s housing needs, the federal government, the provinces and territories, cities and towns, the private sector, and non-profits must work together to ensure everyone has an affordable place to call home.
“We have a plan to build a Canada that works better for you, where you can get ahead, where your hard work pays off, and where you can buy a home. Faced with a shortage of housing options and increasingly high rent and home prices, younger Canadians understandably feel like the deck is stacked against them. We are changing that. What we are announcing today will make a downpayment much more attainable for younger Canadians. And by extending amortization, monthly mortgage payments will be more affordable for young Canadians who want that first home of their own.” – Chrystia Freeland, Deputy Prime Minister and Minister of Finance
“These measures are going to make it easier for young Canadians to save for their first home, and help bring down their monthly mortgage costs for new builds.” – Sean Fraser, Minister of Housing, Infrastructure and Communities