Mortgage insurance expanded: 30-year amortizations, refinancing

Summary#

The final rule titled Regulations Amending the Insurable Housing Loan Regulations and the Eligible Mortgage Loan Regulations (SOR/2025-55) formalizes a set of mortgage-insurance changes the government announced earlier. In practice it lets some first‑time buyers and buyers of new homes access longer amortizations, raises certain insured‑mortgage price limits, allows insured refinancing to add units, and fixes how lenders must test borrowers’ payments.

What it does#

• Defines who counts as a first‑time home buyer and what “newly built” means for mortgage insurance purposes.
• Allows mortgage amortization up to 30 years (instead of 25 years) for borrowers who are first‑time buyers or buying newly built homes, subject to eligibility rules.
• Sets the minimum qualifying rate used to test borrowers’ ability to pay as the greater of the borrower’s contract rate plus 2%, or 5.25%.
• Raises the insured‑mortgage price cap for certain high‑ratio loans from $1,000,000 (old rule) to $1,500,000.
• Creates a new insured loan category for financing improvements that add family housing units (secondary suites, laneway homes, etc.) with conditions such as:
  • combined loans must be ≤ 90% of the after‑improvement value;
  • after‑improvement property value must be under $2,000,000;
  • added units may not be rented for less than 90 consecutive days;
  • maximum amortization 30 years;
  • at least one borrower/guarantor must generally have a credit score ≥ 600 (with a small exception);
  • gross and total debt service ratio limits of 39% and 44%.
• Removes the minimum qualifying rate requirement in a specific switching case for some uninsured (low‑ratio) mortgage renewals when a lender purchases portfolio insurance; insurers may also allow an increase of up to $3,000 to cover switching costs.
• Adds a limited exception so the debt‑service test does not apply when refinancing to discharge certain prior low‑ratio loans from federally regulated lenders (subject to timing and lender type).
• Many parts are retroactive to dates the government already announced: notably June 1, 2021, August 1, 2024, December 15, 2024, December 16, 2024, and January 15, 2025 (different rules apply depending on the application date).

Who's affected#

• First‑time home buyers who are buying newly built homes or otherwise meet the new definition.
• Buyers of newly constructed homes.
• Homeowners who want to refinance to add legal secondary suites or other additional units.
• Lenders and private mortgage insurers that underwrite insured mortgages.
• Prospective borrowers whose mortgage applications are tested under the new minimum qualifying rate.
• Taxpayers indirectly, because insured mortgages are backed by federal guarantees (the rules change how that exposure is managed).

If it’s unclear whether a particular situation qualifies (for example, exact timing or what counts as “newly built”), the regulations use specific dates and tests that lenders and insurers will apply.

Why it matters#

• The changes make it easier for some people (especially younger or first‑time buyers and those buying new builds) to get lower monthly payments by allowing longer amortizations.
• Raising the insured price cap to $1,500,000 and allowing insured refinancing to add units up to $2,000,000 can help more buyers and support adding rental units, which may increase housing supply.
• The tougher test for borrower payments (contract rate + 2% or 5.25%) is meant to protect borrowers and the mortgage insurance system if interest rates rise, but it can also make qualification harder for some applicants.
• Lenders, insurers and borrowers need to pay attention to the effective and retroactive dates; many of these measures have already been treated as in effect by industry and are now formalized in regulation.