Budget 2026: A Higher Insured Price Limit, 30-Year Amortizations and What Is Still Only a Proposal

What the budget actually says about mortgages

Thursday's federal budget has a short section titled "Helping Canadians get an affordable mortgage." Most of it is proposals rather than rules, and that distinction matters more than the headlines do.

According to Budget 2026, Chapter 3, the government proposes to amend mortgage insurance rules to raise the home price limit for optional mortgage insurance from $1 million to $1.5 million, and to permit 30-year amortizations for these insured mortgages, provided that at least one borrower is a first-time home buyer or the home is newly built.

Canadian Mortgage Trends went through the measures one by one and noted that the budget gives no start date for this change. It also pointed out that the new ceiling would bring optional insurance in line with the $1.5 million cap that has applied since December 2024 to buyers putting down less than 20%.

What "optional" mortgage insurance means

When you put down less than 20%, mortgage default insurance is required. When you put down 20% or more, the lender may choose to insure the loan anyway, and that is the optional kind. An insured loan protects the lender, which in some cases lets it price the mortgage differently from an uninsured one. We explain how the premium itself is worked out in our piece on the CMHC premium.

Today, that optional route stops at a $1 million price. A buyer putting 20% down on a $1.2 million home sits above it, so the lender could not choose to insure that loan. Canadian Mortgage Trends gave that same example: under the proposed limit, such a buyer could have access to more lender offers.

Ontario is where this bites. A $1.2 million purchase is not unusual in the Toronto area, and it is well above anything in Waterloo Region or London, where benchmark prices sit around $600,000 to $660,000. For most of the markets we work in, the price limit is not the constraint. The amortization piece may matter more.

The 30-year amortization, in dollars

Amortization is the number of years over which the balance is scheduled to be repaid, and it is separate from the term, the length of your contract. A longer amortization lowers the required payment and raises the total interest paid. Here is the arithmetic, illustrative only.

Take a $1.2 million home with 20% down, so a $960,000 mortgage, at an illustrative 4.50% fixed contract figure. Canadian fixed mortgages compound semi-annually, so the monthly factor is (1 + 0.045 ÷ 2) to the power of one-sixth, minus one.

• 25 years: about $5,313 a month, roughly $634,000 in total interest over the full amortization.
• 30 years: about $4,840 a month, roughly $782,600 in total interest.
• The difference: about $473 less a month, about $148,600 more interest over the life of the mortgage.

That is a worked example, not an offer, and your actual figures depend on the lender, your term and the day you apply. The point is the trade: a lower payment now, paid for with more interest later. Our earlier look at longer amortizations on insured mortgages covers how widely they are already used, and you can test your own numbers in our mortgage calculators.

The other mortgage measures, and how firm each one is

• Prepayment penalties. The government intends to consult on improving transparency around prepayment penalties for insured mortgages, so borrowers can better understand and compare the cost of paying a mortgage off early. According to Canadian Mortgage Trends, the budget does not propose a cap. If you are weighing a break, Penalty Protector Pro is where we run the numbers on your actual contract.
• Insured mortgage pricing data. New regulations would have the Bank of Canada publish more public information on insured mortgage pricing. The budget does not say which figures, how often or when.
• CRA income verification. The budget proposes giving the Canada Revenue Agency authority to enter agreements with lenders and insurers to verify income, with $13 million over three years from 2027-28 to develop and pilot it. Canadian Mortgage Trends reported that broker access is still unresolved.
• Foreign buyer ban. The budget proposes extending the ban on foreign purchases of existing homes by two years, to 1 January 2029, with new homes exempt. Our earlier article described the ban as expiring on 1 January 2027; that date stands unless the proposal becomes law.
• Deposit insurance. The deposit insurance limit would rise to $250,000, with temporary high-balance coverage for events such as the sale of a home. Canadian Mortgage Trends noted the budget does not say how much of a seller's proceeds, or for how long.

What to do with this today

Very little changes on your file this week. Lenders and insurers will not apply a proposal until it is in force and they have published their own criteria, and the budget leaves several start dates open.

• Buying under $1 million: nothing here changes how you qualify. Get the plan done on the rules that apply now.
• Buying between $1 million and $1.5 million with 20% down: ask your broker to watch for a start date, because it could widen the lender options.
• Counting on a 30-year amortization: do not build a purchase around it until it is law and you meet the first-time or new-build condition.
• Renewing: the penalty consultation does not change your contract. Read the penalty clause before you sign, not after.

Policy changes arrive in stages. What stays constant is that your file is assessed on your income, debts, down payment and the lender's criteria on the day you apply. If you would like to see where you stand under today's rules, the pre-qualification tool is a starting point, and a conversation is the next step.