In response to the ongoing housing affordability crisis, the Canadian government implemented significant mortgage reforms on December 15, 2024. These measures aim to make homeownership more accessible while encouraging new housing development.
Key Changes
Increased Insured Mortgage Cap
The cap on insured mortgages has been raised from $1 million to $1.5 million. This enables buyers to purchase homes with a minimum down payment as follows:
- For homes priced $500,000 or less: 5% of the purchase price.
- For homes priced $500,000 to $1.5 million: 5% on the first $500,000 and 10% on the portion above $500,000.
To highlight the impact of the 2024 mortgage reforms, let's compare the minimum down payment required for a $1,200,000 home before and after the changes:
Before the Change
Previously, insured mortgages were only available for homes priced up to $1,000,000. For homes exceeding this amount, buyers needed a 20% down payment:
20% of $1,200,000 = $240,000
Under the old rules, the minimum down payment for a $1,200,000 home was $240,000, effectively limiting accessibility for many buyers.
After the Change
With the increase in the insured mortgage cap to $1,500,000, the new minimum down payment structure applies:
5% on the first $500,000: $25,000
10% on the portion above $500,000: 10% of $700,000 = $70,000
Total Down Payment = $25,000 + $70,000 = $95,000
The Difference
Old Requirement: $240,000
New Requirement: $95,000
Savings: $145,000
Implications for Buyers on the Sunshine Coast
This significant reduction in the required down payment makes higher-priced homes more accessible, particularly on the Sunshine Coast, where property values often exceed $1,000,000. Buyers who were previously priced out may now have the opportunity to enter the market, potentially driving increased demand.
For sellers, this change could result in a larger pool of buyers, improving market activity and competition for properties in this price range. If you're considering buying or selling, understanding how these reforms affect your options is essential.
Reach out to our team for expert guidance tailored to your real estate needs.