30-Year Amortization for First-Time Buyers: What You Need to Know

As of December 2024, first-time home buyers purchasing newly constructed homes can now access 30-year amortizations on insured mortgages (those with less than 20% down). Previously, insured mortgages were capped at 25-year amortizations, regardless of the buyer's situation.

This is a significant policy change. For a buyer stretching to afford a $500,000 home in Calgary, the difference between a 25-year and 30-year amortization is approximately $250 per month. That can be the difference between qualifying and not qualifying — or the difference between house-poor and financially comfortable.

But 30-year amortizations come with trade-offs. You pay significantly more interest over the life of the mortgage, and you build equity more slowly. Here is everything you need to know to decide if 30 years is the right choice for your situation.

What Changed in December 2024?

Old Rules (Before December 2024)

Insured mortgages (less than 20% down, CMHC/Sagen/Canada Guaranty insurance required):

• Maximum amortization: 25 years
• Applied to all buyers, all properties

Uninsured mortgages (20%+ down, no insurance required):

• Maximum amortization: 30 years (some lenders offered up to 35 years)

This created an odd situation where buyers with smaller down payments (who generally need lower payments more) were forced into shorter amortizations and higher payments.

New Rules (December 2024 Forward)

Insured mortgages for first-time buyers purchasing new builds:

• Maximum amortization: 30 years

All other insured mortgages:

• Maximum amortization: 25 years (unchanged)

Uninsured mortgages:

• Maximum amortization: 30 years (unchanged)

Who Qualifies for 30-Year Insured Amortization?

You must meet both of these criteria:

1. You Must Be a First-Time Home Buyer

Definition: You have not owned a home in which you lived at any time during the current calendar year or the previous four calendar years.

Example: If you are buying in 2025, you cannot have owned and occupied a home anytime from 2021 to 2025.

What counts as ownership:

• You owned a home in Canada
• You owned a home anywhere in the world (international ownership counts)
• You were on title, even if you did not live there (if you were on your parents' title as a co-owner, this disqualifies you)

What does NOT disqualify you:

• You owned a rental property but never lived in it
• Your spouse owned a home before you met (only your personal history matters)
• You inherited a property but never lived in it

2. You Must Be Purchasing a Newly Constructed Home

Qualifies as "new construction":

• Brand new home, never occupied
• New condo in a building under construction or just completed
• Newly built townhouse from a developer
• Home built on a lot you own (new construction contract with builder)

Does NOT qualify:

• Resale homes (existing homes being sold by current owners)
• Renovated homes (even extensive renovations do not make it "new")
• Homes that were previously occupied, even briefly

Grey area: Some lenders define "new construction" as a home that has never been occupied and was completed within the past 12 months. Others are stricter. Confirm with your lender before assuming you qualify.

30-Year vs 25-Year: The Payment Difference

The monthly payment reduction from extending amortization is significant, especially on Calgary price points.

Example 1: $400,000 Mortgage at 5.0%

25-year amortization:

• Monthly payment: $2,326
• Total interest paid over 25 years: $297,800

30-year amortization:

• Monthly payment: $2,147
• Total interest paid over 30 years: $372,920

Monthly savings: $179 Additional interest over life of mortgage: $75,120

Example 2: $500,000 Mortgage at 5.0%

25-year amortization:

• Monthly payment: $2,908
• Total interest paid over 25 years: $372,250

30-year amortization:

• Monthly payment: $2,684
• Total interest paid over 30 years: $466,150

Monthly savings: $224 Additional interest over life of mortgage: $93,900

Example 3: $600,000 Mortgage at 5.0%

25-year amortization:

• Monthly payment: $3,489
• Total interest paid over 25 years: $446,700

30-year amortization:

• Monthly payment: $3,221
• Total interest paid over 30 years: $559,380

Monthly savings: $268 Additional interest over life of mortgage: $112,680

The pattern is clear: 30-year amortizations reduce your monthly payment by roughly 8% to 10%, but increase your total interest cost by 25% to 30%.

The Qualification Advantage: How Much More You Can Borrow

Mortgage qualification is based on monthly payment affordability, not total interest paid. A lower monthly payment means you can qualify for a larger mortgage.

Qualification Example

Household income: $100,000/year Monthly gross income: $8,333 Existing debts: $600/month (car loan and credit card minimum) Property taxes (estimated): $300/month Heating (estimated): $150/month Condo fees: $0 (single-family home)

Lender uses 39% GDS ratio (maximum housing costs as % of gross income)

Maximum housing costs allowed: $8,333 × 39% = $3,250/month

Housing costs include: Mortgage payment + property taxes + heating + 50% condo fees (if applicable)

Available for mortgage payment: $3,250 - $300 (taxes) - $150 (heating) = $2,800/month

With 25-year amortization at 5.0%:

• Maximum mortgage: $481,000

With 30-year amortization at 5.0%:

• Maximum mortgage: $521,000

Qualification boost: $40,000 (approximately 8% higher purchasing power)

On a Calgary new build priced at $520,000 with 5% down, the 30-year amortization is the difference between qualifying and not qualifying.

When 30-Year Amortization Makes Sense

You Are Stretching to Qualify

If you are right at the edge of qualifying for the home you want, and the 30-year amortization gets you there, it is a reasonable choice. Owning a home and building equity (even slowly) is better than renting indefinitely.

Scenario: You want to buy a $480,000 new condo in Calgary with 5% down. Your income qualifies you for a $455,000 mortgage on 25-year amortization, but you need $481,000. The 30-year amortization gets you approved.

You Prioritize Cash Flow Over Total Interest

If your goal is to free up monthly cash flow for other priorities — saving for retirement, paying down student loans, building an emergency fund — the 30-year amortization gives you breathing room.

Scenario: You can afford the 25-year payment, but choosing 30 years saves you $220/month. You redirect that $220 into your TFSA, building liquid savings while still owning a home.

You Plan to Make Extra Payments

If you choose a 30-year amortization but make lump-sum prepayments (most mortgages allow 10% to 20% annual prepayment), you can pay off the mortgage faster while maintaining the flexibility of a lower required payment.

Scenario: You choose 30-year amortization, payment is $2,684/month. You receive annual bonuses averaging $10,000. You put $8,000/year toward the mortgage as a lump-sum payment. You effectively pay it off in 22 years instead of 30, saving significant interest while keeping monthly flexibility.

You Expect Income Growth

If you are early in your career and expect income to increase significantly over the next 5 to 10 years, starting with a lower payment gives you affordability now, and you can refinance to a shorter amortization later or make extra payments as income grows.

Scenario: You are 27, earning $70,000 as a junior engineer. You expect to be earning $100,000+ within 5 years. The 30-year amortization lets you buy now, and in 5 years you can refinance to 25 years or make aggressive prepayments.

When 25-Year Amortization Is Better

You Can Comfortably Afford the Higher Payment

If the 25-year payment fits your budget without stress, choose it. You will save tens of thousands in interest and build equity faster.

Scenario: Your income easily qualifies you for the payment on either 25 or 30 years. You have stable employment, low debts, and emergency savings. Take the 25-year and pay less interest.

You Want to Build Equity Faster

The difference in equity buildup is significant. After 5 years on a $500,000 mortgage at 5%:

• 25-year amortization: Principal paid down by $62,800
• 30-year amortization: Principal paid down by $48,300
• Difference: $14,500 more equity with 25-year

If you plan to sell or refinance within 5 to 7 years, faster equity growth gives you more options.

You Are Financially Conservative

If you dislike debt and want to be mortgage-free as quickly as possible, the 25-year amortization aligns better with that mindset.

Scenario: You are buying your first home at age 45. You want to be mortgage-free before retirement at 65. A 25-year amortization gets you there at age 70 (still tight), but a 30-year pushes you to age 75. The 25-year is the better fit.

Calgary New Build Market: Where 30-Year Amortization Applies

Calgary has a strong new construction market, particularly in these communities:

Active New Build Communities (2025)

Inner City:

• Bridges (East Village condos and townhouses)
• West District (Westside redevelopment, condos)

Established Communities:

• Currie (former CFB Calgary, new community)
• University District (near Foothills Hospital, condos and townhouses)

Suburban Communities:

• Belmont (northwest, single-family and townhouses)
• Redstone (northeast, single-family and townhouses)
• Legacy (southeast, single-family and townhouses)
• Livingston (northeast, single-family and townhouses)
• Carrington (northwest, single-family and townhouses)
• Auburn Bay, Mahogany, Cranston (southeast lake communities, ongoing phases)

Typical new build pricing (2025):

• New condo (600-750 sq ft): $280,000 to $380,000
• New townhouse (1,200-1,500 sq ft): $380,000 to $480,000
• New single-family (1,600-2,000 sq ft): $520,000 to $680,000

With 5% down on a $480,000 new townhouse, the 30-year amortization can be the difference between qualifying and not qualifying for many first-time buyers.

The Prepayment Strategy: Best of Both Worlds

If you choose a 30-year amortization, you are not locked into actually taking 30 years to pay it off. Most Canadian mortgages include generous prepayment privileges:

Standard Prepayment Options

• 10% to 20% annual lump-sum prepayment (without penalty)
• 10% to 20% payment increase option (increase your monthly payment once per year)
• Double-up payments (make an extra payment anytime)

Example: Aggressive Prepayment on 30-Year Amortization

Mortgage: $500,000 at 5.0%, 30-year amortization Required monthly payment: $2,684

Strategy:

• You pay the required $2,684/month
• Every year, you make a $10,000 lump-sum prepayment (within the 20% annual limit)

Result:

• Mortgage is paid off in 20 years instead of 30
• Total interest paid: $313,000 (vs $466,150 if you made no extra payments)
• Savings: $153,150

You get the flexibility of a lower required payment, but if you can afford extra payments, you dramatically reduce total interest while maintaining flexibility for years when money is tight.

30-Year Amortization and Mortgage Insurance Premiums

When you put less than 20% down, you pay mortgage default insurance premiums. These premiums are the same whether you choose 25-year or 30-year amortization.

CMHC insurance premiums (added to mortgage amount):

Example:

• Purchase price: $500,000
• Down payment: $25,000 (5%)
• Mortgage amount: $475,000
• Insurance premium: $475,000 × 4.00% = $19,000
• Total mortgage (including premium): $494,000

This premium is the same whether you choose 25 or 30 years. The only thing that changes is your monthly payment.

What Happens at Renewal?

Your amortization is set when you first get your mortgage, but it gets re-evaluated at renewal (typically every 5 years).

Scenario 1: Keep the Same Amortization

If you started with 30 years and renew after 5 years, you have 25 years remaining. Your new term continues with 25-year amortization.

Scenario 2: Shorten the Amortization

At renewal, you can choose to shorten your amortization (e.g., from 25 years remaining to 20 years) to pay off the mortgage faster. This increases your payment but reduces total interest.

Scenario 3: Extend the Amortization (If Refinancing)

If you are refinancing (not just renewing), you can extend your amortization back to 30 years (or 25 years if insured). This lowers your payment but increases total interest. People do this when they need to free up cash flow or are consolidating debt.

Important: If you simply renew with your existing lender, you cannot extend amortization beyond the remaining term. You can only extend if you refinance (which involves legal fees and potentially penalties if you break your term early).

FAQ: 30-Year Amortization for First-Time Buyers

Q: Can I get 30-year amortization on a resale home? A: Not if you have less than 20% down. The 30-year insured mortgage is only for first-time buyers purchasing new builds. Resale homes with less than 20% down are capped at 25 years.

Q: If I have 20% down, can I get 30-year amortization on any home? A: Yes. With 20%+ down (uninsured mortgage), you can get 30-year amortization on any property type — resale, new, condo, single-family.

Q: Does 30-year amortization mean a 30-year mortgage term? A: No. Amortization is the total time to pay off the mortgage. Term is how long your rate is locked (typically 5 years). You will renew multiple times over 30 years, but the amortization stays on track.

Q: Can I switch from 30-year to 25-year amortization later? A: Yes, at renewal you can choose a shorter amortization. Or you can make extra payments anytime (within your prepayment limits) to pay it off faster.

Final Thoughts

The 30-year amortization option for first-time buyers on new builds is a meaningful policy change. It improves affordability and helps buyers qualify for homes they otherwise could not access. But it is not free money — you pay significantly more interest over the life of the mortgage.

If you are stretching to qualify, or if you prioritize cash flow and want to redirect savings elsewhere, the 30-year amortization makes sense. If you can comfortably afford the 25-year payment, choose it and save tens of thousands in interest.

And remember: choosing a 30-year amortization does not mean you have to take 30 years to pay it off. Use prepayment privileges to pay it down faster while maintaining the flexibility of a lower required payment.

In Calgary's new build market, where prices are rising and inventory is strong, the 30-year option opens up homeownership to buyers who were previously just out of reach. Use it strategically.

For more first-time buyer information, see the First-Time Home Buyer Guide: Calgary 2025.

Questions about 30-year amortizations or first-time buyer financing? Contact Jay: jaysinghmortgage@gmail.com or 403.409.1126.