30-year amortization in Canada: who qualifies and what it costs
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By Editorial team
A first-time buyer purchasing a $600,000 new build in Ontario with 5% down and a 5.20% fixed rate faces a clear trade-off under the August 2024 federal policy change: extend the amortization to 30 years and pay $3,235/month, or stay at 25 years and pay $3,516/month. The 30-year option saves $281/month - but costs $109,880 more in total interest over the life of the mortgage. This article shows exactly who qualifies, what the numbers look like, and when the extra 5 years is worth it.
What changed in August 2024
Before August 2024, all insured mortgages in Canada - those with less than 20% down - were capped at a 25-year amortization. The federal government extended this cap to 30 years, but only for a specific buyer profile: first-time buyers purchasing newly built homes. The intent was to reduce monthly payments for buyers entering the market through new construction, where supply is needed most.
The CMHC premium tier is unchanged. A 5% down payment still attracts a 4.00% premium on the insured mortgage amount - added to the loan and amortized over the full period. Choosing 30 years does not change which premium bracket you fall into.
The scenario modeled
Both tabs use the same purchase, rate, and down payment. The only variable is amortization length. All figures use Canadian semi-annual compounding, as required under the Interest Act.
| Input | 25-year amortization | 30-year amortization |
|---|---|---|
| Purchase price | $600,000 | $600,000 |
| Down payment | $30,000 (5%) | $30,000 (5%) |
| CMHC premium | 4.00% of insured amount | 4.00% of insured amount |
| Rate | 5.20% fixed | 5.20% fixed |
| Amortization | 25 years | 30 years |
| Compounding | Semi-annual (Canadian) | Semi-annual (Canadian) |
| Payment frequency | Monthly | Monthly |
The findings
The 30-year amortization cuts the monthly payment by $281/month. That is real cash-flow relief. The cost is $109,880 more in total interest - paid in smaller amounts each month over an extra 60 payments. The schedule is 60 months longer: 300 months (25 years) versus 360 months (30 years).
| 25-year amortization | 30-year amortization | Difference | |
|---|---|---|---|
| Monthly P&I | $3,516 | $3,235 | $281/mo less |
| Total interest | $461,867 | $571,747 | $109,880 more |
| Schedule length | 300 months (25 years) | 360 months (30 years) | 60 months longer |
Canadian context
The August 2024 change was announced in the federal budget and took effect for mortgages with an application date on or after August 1, 2024. CMHC confirmed the 30-year amortization option is available through all CMHC-approved lenders for eligible first-time buyers of new builds. The purchase price limit for CMHC insurance remained at $999,999 - meaning a $1,000,000 purchase does not qualify regardless of amortization.
The same CMHC premium tiers apply: 4.00% of the insured amount for down payments of 5-9.99%, 3.10% for 10-14.99%, and 2.80% for 15-19.99%. On a $570,000 insured mortgage at 5% down, the 4.00% premium adds $22,800 to the loan, bringing the insured mortgage to $592,800. Both the 25-year and 30-year calculations in this article use that same insured amount.
Source: Canada Mortgage and Housing Corporation, "Changes to Canada's mortgage rules," published August 2024, accessed June 2026. URL: https://www.cmhc-schl.gc.ca/consumers/home-buying/mortgage-loan-insurance-for-consumers/changes-to-canadas-mortgage-rules
When the 30-year option makes sense - and when it does not
The 30-year amortization helps when: the $281/month saving is what closes the gap between qualifying and not qualifying under GDS/TDS rules. Canada's stress test requires qualifying at 5.25% or your contract rate plus 2% - whichever is higher. A lower monthly payment reduces your gross debt service ratio and can make the difference for buyers near the qualification threshold. It also helps when cash flow is genuinely tight and you plan to make prepayments in stronger income years.
It does not help when: you can comfortably service the 25-year payment. The $109,880 in extra lifetime interest is a real penalty. Buyers who choose 30 years for convenience rather than necessity pay that cost in full. If you have flexibility, starting at 25 years and making optional annual prepayments costs less than choosing 30 years upfront.
The new-build requirement: If you are purchasing a resale property, you cannot use this option. The cap for insured mortgages on existing homes remains 25 years. Only newly constructed homes - those that have never been occupied - qualify for the extended amortization under the 2024 policy.
After the first term: At renewal, the extended amortization stays with the mortgage. A buyer who started at 30 years and makes no prepayments will still have roughly 25 years remaining on their amortization at first renewal, versus 20 years for the standard option. That higher remaining balance increases future interest exposure and narrows refinancing flexibility.
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Frequently asked questions
- Who qualifies for a 30-year insured mortgage in Canada?
- As of August 2024, first-time buyers purchasing a newly built home are eligible for a 30-year insured amortization. You must not have owned a home in the past four years, the purchase price must be under $1,000,000, and your down payment must be under 20% (triggering CMHC insurance). Existing homes and buyers who are not first-time purchasers remain capped at 25 years for insured mortgages.
- How much more interest does a 30-year amortization cost compared to 25 years?
- On a $600,000 purchase with 5% down at 5.20% fixed, the 30-year option costs $109,880 more in total interest over the life of the mortgage compared to 25 years. The monthly payment is $281 lower, but that monthly relief compounds into a substantial lifetime cost if you never shorten the amortization through prepayments or refinancing.
- Does the CMHC premium change if I choose a 30-year amortization?
- No. The CMHC premium tier is determined by your down payment percentage, not your amortization length. At 5% down, the premium is 4.00% of the insured mortgage amount regardless of whether you choose a 25- or 30-year amortization. The premium is the same in both cases.
- Can I use the 30-year amortization on a resale home?
- Not currently. The August 2024 federal policy change applies only to newly built homes. Purchasing an existing (resale) property with less than 20% down is still subject to the 25-year maximum amortization for insured mortgages. Only new construction qualifies for the extended term.
- Should I choose a 30-year amortization if I can afford 25-year payments?
- If you can comfortably qualify and service the 25-year payment, the 25-year amortization is the better financial choice - you pay $109,880 less in interest over the life of the loan. The 30-year option is most useful when the $281/month difference is what allows you to qualify under GDS/TDS rules, or when cash flow is genuinely tight and you plan to make lump-sum prepayments in better years.