Financing Tips for First-Time Buyers, Upgraders & Downsizers:
New Regulations and Programs for 2026
The Canadian real estate market continues to evolve with meaningful changes from both government and lenders aimed at making homeownership more attainable. Whether you’re a first-time buyer, moving up, or downsizing, understanding these updates — and how they affect financing — can help you make smarter decisions and optimize your budget.
First-Time Buyers
What’s Changed for 2025–2026
✔ Increased insured mortgage cap
The federal government increased the maximum price for insured mortgages from $1 million to $1.5 million. This means buyers can put less than 20% down on homes up to $1.5 million — opening up higher-priced home options without needing a full 20% down payment.
✔ 30-Year Amortization Now Expanded
30-year amortization options are now available to all first-time home buyers (not just new builds) on insured mortgages, helping to reduce monthly payments.
✔ New GST/HST Rebate (PROPOSED)
A proposed GST/HST rebate for first-time home buyers could eliminate the federal portion of GST/HST on new homes up to $1 million, with a phased rebate up to $1.5 million (up to $50,000). The bill is tabled and may become law soon but isn’t yet in effect.
✔ First-Time Home Buyer Incentive (FTHBI) Cancelled
The shared-equity FTHBI program has been discontinued (no longer available).
a) Saving for a Down Payment
Minimum Down Payment Rules (Updated):
- 5% on homes $500,000 or less
- 5% on first $500,000 + 10% on portion between $500,000 and $1,499,999
- 20% on homes $1.5 million and above
Homes up to $1.5 million can still qualify for insured mortgages with <20% down thanks to the increased cap.
b) Understanding Mortgage Options
- Fixed vs. Variable Rates: Stable vs. potentially savings depending on market movement.
- Pre-Approval: Helps define budget and signals seriousness to sellers.
- 30-Year Amortization (New): Now available on insured mortgages for first-time buyers, lowering monthly payments by extending the term.
c) Additional Costs
- Closing Costs: Typically, 1.5%–4% of purchase price for legal fees, land transfer tax, inspections, etc.
- GST/HST New Housing / FTHB GST Rebate (PROPOSED):
- Under the proposed First-Time Home Buyers’ GST/HST rebate, buyers could recover up to 100% of GST on new homes up to $1 million, with a phased rebate up to $1.5 million (up to $50,000).
- This is in addition to any existing GST/HST New Housing Rebate where applicable.
Buyers Moving Up
What’s New
✔ Portability and Refinancing Rules
Stronger mortgage portability and refinancing options allow you to potentially switch lenders or carry forward your existing rate without re-stress testing (as part of expanded mortgage charter protections).
a) Evaluating Your Current Home
- Equity Position: Use accumulated equity as down payment on your next home.
- Market Conditions: A seller’s vs buyer’s market influences your strategy.
b) Financing the New Purchase
- Port Your Mortgage: Keeping your current rate and terms may be possible.
- Bridge Financing: Helps if timing doesn’t align between sale and purchase.
- Affordability: Factor in utilities, taxes, and maintenance.
Buyers Downsizing
What’s Important Now
- With interest rates stabilizing and some provincial incentives remaining, downsizing can free up equity and offer ongoing cost savings.
- Downsizers should also consider new provincial or municipal rebates where available.
a) Timing & Market Strategy
- Sell high and buy strategically lower — timing matters significantly.
- Factor renovation and financing on the new property.
b) Financial Planning
- Downsizing can provide extra funds for retirement, travel, or investment.
- Less space often means lower utilities, taxes, and upkeep.
General Financing Considerations
Credit Score & Financial Health
- A strong credit score and low debt will help you access better mortgage terms.
Debt Ratios & Stress Test Rules
- Lenders look at Gross Debt Service (GDS) and Total Debt Service (TDS) ratios when qualifying you (typically under certain thresholds, depending on lender and product).
Government & Tax Incentives
- Home Buyers’ Plan (HBP): Withdraw up to $35,000 (per person) from RRSPs for a home purchase.
- First Home Savings Account (FHSA): Save up to $40,000 tax-free to use toward a qualifying home.
- GST/HST Rebates: Existing GST/HST New Housing Rebate and proposed FTHB GST/HST rebate could significantly reduce tax costs on new builds.
- Land Transfer Tax & Provincial Rebates: Many provinces offer rebates on land transfer tax for first-time buyers (e.g., Ontario up to $4,000).
Professional Advice
- Mortgage Brokers: Access multiple lender options and help navigate changing rules.
- Real Estate Agents: Guide negotiation strategy, pricing, and market conditions.
- Tax/Financial Advisors: Help maximize federal and provincial incentives.
Quick “What’s Changed (2024–2026)” Summary
✔ Insured mortgage cap increased to $1.5 M (allowing <20% down on higher priced homes).
✔ 30-year amortizations expanded to all first-time buyers and purchases of newly built homes to lower monthly payments.
✔ First-Time Home Buyer Incentive (FTHBI) has ended.
✔ GST/HST rebate for first-time buyers proposed, offering up to $50,000 in savings on new homes up to $1.5 M (pending legislation).
✔ FHSA & HBP remain valuable tools for down payment savings.
Whether you’re a first-time buyer, upgrading, or downsizing, these updates matter — and planning with them in mind can help you financially optimize your purchase. Always consult with a mortgage professional to tailor strategies to your situation.
