30-Year Insured Mortgages

30-Year Insured Mortgages

The government just released guidelines for 30-year insured amortizations. These extended repayment periods are earmarked for first-time purchasers of newly-built residences and kick off this August.

To get a 30-year insured amortization:

1. At least one of the borrowers on the application must be a first-time homebuyer, meaning they meet one of the following criteria:

A) The borrower has never purchased a home before;

B) In the last 4 years, the borrower has not had a principal residence that either they or their current spouse or common-law partner owned; or,

C) The borrower recently experienced the breakdown of a marriage or common-law partnership.

2. The new home must not have been previously occupied for residential purposes. 

3. The mortgage must be high-ratio insured (less than 20% down)

4. This measure applies only to mortgage insurance applications that lenders submit to mortgage insurers “on or after August 1, 2024.”

*IE, funding must be well after August 1, because time needs to be taken to underwrite the file. 

So… how much will this insured policy truly incentivize new construction, given the typical 20%+ deposit requirements of builders? I suspect not so much.