Recent housing policy changes in Canada have taken aim at setting homeownership on a path that is more attainable, especially for those buying for the first time. These initiatives help new arrivals to the market who are often finding it difficult to navigate the housing market and finding their first home with a much-promised stable and sufficient wallet. Here is important information on these recent policy updates and what they can mean for new immigrants.
Looking at the ban on homebuying by non-Canadians
As of January 2023, the prohibition on the purchase of residential property by non-Canadians act restricts how much residential property foreigners can own in Canada. However, there are important exemptions for temporary residents — such as foreign workers and students — that would enable them to be eligible under certain conditions. This will restrict foreign investment in the housing sector and assist those who are new in their search for a home.
Higher RRSP homebuyer plan limits
Starting April 2024, first-time homebuyers, including permanent residents, will be able to access up to $60,000 from a Registered Retirement Savings Plan (RRSP) towards the purchase of a home. The spike from the previous $35,000 cap provides new entrants with additional space to build their down payment and make buying a home easier.
FHSA: the tax-free First Home Savings Account
The First Home Savings Account (FHSA) enables residents of Canada to save a maximum of $8,000 in the account each year, with a lifetime contribution limit of $40,000 to purchase a first home. Yet, another account that can help newcomers get ahead when saving that money for a down payment is a tax-deductible, tax-free and tax-exempt account for contributions, growth and withdrawals, respectively. Together, the FHSA and the higher RRSP home withdrawal limit provide newcomers with greater financial tools, purpose-built to help them buy their first home.
Longer mortgage amortization periods
Starting in August 2024, qualified first-time buyers of new homes will have the option of a 30-year mortgage amortization on insured loans, an increase from the current maximum of 25 years. It lowers monthly payments, which eases the strain on young families and newcomers that could face high monthly costs on those homes.
New help for homeowners: updates to the Canadian mortgage charter
Now, the Canadian mortgage charter has been updated and that update, most of which is effective in late 2024, includes several protections for new homeowners, especially those facing financial hardship. Lenders must notify homeowners months in advance about renewal choices, offer payment deferrals during difficult times and do away with requalification fees when certain mortgages switch hands. The revisions make it more secure, so that new homeowners will not need assistance in maintaining homeownership.
These policy changes represent a massive opportunity for new arrivals wanting to build their own houses. Whether it be higher thresholds for RRSP withdrawals, FHSA savings or longer mortgage terms these policies lift barriers for first-time buyers. With careful planning and an understanding of these new supports, new arrivals can take the first steps on the road to stability and happiness in Canada.
