Let’s look at the difference in payment between a 25 year mortgage and a 30 year mortgage. Assume that you buy a home for $800,000 with a 10% down payment. We’ll use a 5 year fixed interest rate of 4.65%. After including CHMC insurance, the total mortgage amount will be $742,320.

In the second part of the chart, we’ll calculate the difference if the down payment is increased to 19.95% (to stay under the 20% threshold). This would result in a total mortgage amount of $658,331 after including CMHC mortgage insurance.

The difference in this calculation is $363/month if you’re paying a 10% down payment (ex: the purchase of a newly built/pre-construction property).

If your down payment is 19.95%, the difference in payment would be $322/month (ex. The purchase of a newly built/pre-construction property or a resale property).

It’s important to know that only a certain set of home buyers will be able to qualify for a 30 year mortgage if you put down less then 20% down payment. Here is the criteria:

1. At least one of the borrowers on the application must be a first time home buyer. A first time home buyer is defined as:
   • Someone who has never purchased a home before;
   • Someone who, in the last 4 years, has not occupied a home as a principal residence that either they themselves or their current spouse or common-law partner owned
2. The property must be a newly constructed home. This means it has never been previously occupied.
3. It must be a high-ratio mortgage. In other words, the home buyer must be putting less than 20% down payment on the purchase.

Despite the fact that a 30 year mortgage lowers your monthly mortgage payment, there are some drawbacks to consider:

• You will build your home equity slower than with a 25 year mortgage
• It will take you longer to pay off your mortgage
• You will pay more interest over the lifetime of the mortgage

If you’re a first time homebuyer and thinking about buying a new home or buying a new condo, and you’d like to find out if you qualify for the 30 year mortgage program, speak with Team Paliwal today.

We can show you all the benefits of working with the right real estate agent and help you navigate these new mortgage rules.

Remember, you’re not alone in this journey. RE/MAX Team Paliwal guides you every step of the way, ensuring a smooth and successful home-buying experience.

The first step is to schedule a no obligation in-person or zoom video call meeting to understand your unique needs. 10 out of 10 buyers have found this initial meeting to be extremely useful in their buying journey. Contact us today!

Picture by PiggyBank on Unsplash