Federal budget proposes broader access to 30-year insured mortgages and clearer rate information

Prime Minister Mark Carney’s 2026 federal budget proposes expanding optional mortgage default insurance and making borrowing costs easier to compare. It would raise the home price limit for this insurance from $1 million to $1.5 million. Insured mortgages could also be repaid over 30 years if at least one borrower is a first-time homebuyer or the property is newly built.

Mortgage default insurance protects lenders against losses if a borrower fails to repay. It is generally required when a buyer puts down less than 20 per cent. Lenders may also choose to insure eligible mortgages with down payments of 20 per cent or more. The budget’s planned expansion applies to this latter group. Current federal rules for these mortgages generally require the property to be worth less than $1 million and limit repayment periods to 25 years. The government says broader eligibility could encourage competition among lenders and give buyers more flexibility.

Similar changes for buyers with smaller down payments took effect in December 2024. Those reforms raised the price limit for high-ratio insured mortgages to $1.5 million and expanded access to 30-year repayment periods for first-time buyers and purchasers of newly built homes. The proposed higher limit would extend to buyers with larger down payments. The government says it would better reflect the cost of buying a home in expensive markets, especially Metro Vancouver and Greater Toronto, where prices rose sharply in the years after the pandemic.

Borrowers with larger down payments can already obtain uninsured mortgages with longer repayment periods, subject to their lender’s rules. The proposed policy would expand which mortgages can qualify for insurance. Spreading the same loan over 30 years rather than 25 generally reduces monthly payments but increases total interest costs if the rate stays the same. The repayment period is separate from the mortgage term, which determines how long the current contract remains in effect.

The budget also announced new regulations to improve public access to information about insured mortgage rates, with the Bank of Canada publishing the data. The government says more current and detailed information would help borrowers compare offers and shop for a better deal.

Another measure would give the Canada Revenue Agency (CRA) legal authority to provide an income verification service through agreements with mortgage lenders and insurers. The federal government plans to spend $13 million over three years, starting in the 2027/2028 fiscal year, to develop and test the service. After that initial phase, it intends to fund the service through arrangements with the industry. The aim is to help lenders and insurers check borrowers’ incomes more reliably, improve mortgage application processing and reduce fraud.

The government will also consult the mortgage industry and other stakeholders on making early payment penalties for insured mortgages easier to understand and compare. These charges may apply when borrowers pay off or renegotiate a mortgage before its term ends, or exceed their permitted extra payments.