The New Mortgage Rules and How It Impacts You

IF you are a first-time homebuyer, the federal government has proposed a Tax-free First Home Savings Account (FHSA) ; in this proposal, homebuyers can save up to $40,000 tax-free with $8000 yearly contribution limit.

The tax-free home savings account is expected to be in place by 2023.

Investment income earned on the account and withdrawals will also be tax-free.

Next, the First time home buyer's tax credit ( FTHBC) is doubled from $5000 to $10,000. This increase means that first-time homebuyers now get up to $1500 back at tax time.

The first-time home buyer's incentive that allows first-time homebuyers to partner with the government is being extended until March 31, 2025.

Other changes expected to impact Canada's real estate market include :

  • A ban on foreign investment in the residential real estate market for two years.
  • House flippers will be subject to total taxation on the profits as business income if a property is sold within 12 months of purchase.
  • Assignment fees will be levied GST/HST

There are several proposals to make buildings and homes greener and more affordable. Below are some mortgage rules that continue to apply in 2022 :

  • Homebuyers will need a credit score of at least 680. This is up from the previous 600. If a couple is buying a home, one of the applicants must have a credit score of at least 680.
  • The maximum Gross debt ratio(GDS) is limited to 35%(down from 39%), and the maximum total debt service ratio (TDS) is now 42%(down from 44%). Profiles subject to good credit and reliable income will be allowed to exceed these guidelines to Max GDS of 39% and TDS of 44%.

This effectively means that you have to show a smaller percentage of your income required to pay your debts.

  • Borrowed funds will no longer count towards your down payment or equity when considerations are being made for your mortgage default insurance.

While these new rules can sound bad, it aims to stabilize the current red-hot housing markets and provide more leverage to home buyers looking to build their equity in the housing market for the long run.

This means room for negotiation regarding the purchase price and room for conditional clauses like home inspection, which were otherwise seen rarely over the past one and a half years.

These moves by the federal government aim to make housing affordable for everyone and incentivize first-time home buyers. De -incentivizing house flipping practices that were seen to drive up the average home price.

I hope this article helps you in your home buying process. If you have any questions regarding the current market status, please contact me.

This is the most recent inventory in GTA regarding the houses available in the market.

Thanks to Swetha Bondili for reviewing a draft of this article and providing feedback. You can reach out to her at