As of August 1st, 2024, the Federal Government will change mortgage regulations. Prime Minister Trudeau has stated: "means you can buy your first home sooner."

So what is this change? From the Department of Finance directly: “Today, the Honourable Chrystia Freeland, Deputy Prime Minister and Minister of Finance, announced that as of 1st August 2024, lenders will be able to begin to offer 30-year amortizations for insured mortgages for first-time homebuyers purchasing new builds.”

Will this help a new home buyer? As always, we need to look at the details.

As a CMHC-insured mortgage, buyers need a minimum down payment of 5% for a purchase price of $500,000 or less. For any portion above $500,000, the minimum down payment increases to 10%, up to the CMHC maximum purchase price of one million.

If you can't pay the down payment or find a home under one million dollars, this change won't “help” you.

This new long-term mortgage rule is interesting because it only applies to "new builds." New homes are fully subject to GST in B.C. and HST in some other provinces.

Even if you qualify for the GST/HST new housing credit, you still end up paying more in taxes. Additionally, a longer-term mortgage means you pay more in interest. The Trudeau government has conveniently left this fact out of the announcement.

To sum up, to use this long-term mortgage program, you need to find a newly built home that costs less than one million for a CMHC-insurable mortgage. The down payment stays the same, and you will still need to pay the GST on all new homes.

Is this a useful program for someone buying their first home? The Liberal Government says, "New 30-year mortgages for first-time buyers of new builds mean lower monthly payments, so you can afford that first home."

This program adds more interest over a long-term mortgage, requires GST on new builds, and doesn't change the down payment for a CMHC-insured mortgage. This shows that the Government doesn't understand all the extra costs first-time buyers face, which only make housing more expensive.

Having said that, what matters most is whether this will help a first-time homeowner. My question this week is: If you are (or were) a first-time home buyer, would having a longer-term mortgage help you?

I can be reached at [email protected] or call toll-free 1-800-665-8711.