This piece was originally published on August 17, 2020, and was updated on October 11, 2022.
A mortgage is a major financial commitment, and will typically take several decades to pay off. But can you get a 30-year mortgage in Canada?
Honestly, the better question is ‘when can you get a 30-year mortgage in Canada’, as well as whether it’s a good idea for you to get one. Here’s everything you need to know.
Can you get a 30-year mortgage in Canada?
While 30-year mortgages do exist in Canada, most mortgages are limited to a 25-year amortization period (the total life of a mortgage). This is because mortgages that require CMHC insurance coverage have a 25-year maximum.
Keep in mind that a longer amortization period is not always better. While taking a long time to pay off your mortgage will reduce your monthly payments, it will also increase the amount of overall interest you will pay over time. It’s important to consider both your current situation as well as your long-term finances. We recommend that you use our amortization calculator to test out different amortization period scenarios so you can get a sense of what the costs would be.
In order to get a 30-year mortgage in Canada, you’ll need to have what’s known as a low-ratio mortgage, which won’t be subject to the CMHC rules.
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High-ratio vs. low-ratio mortgages
A high-ratio mortgage is one with a down payment of less than 20% of the purchase price. The ratio in the name is the mortgage to property value ratio. A smaller down payment increases that ratio.
High-ratio mortgages require the borrower to pay for mortgage default insurance, also commonly known as CMHC insurance. This coverage is legally mandated but will restrict the borrower to a 25-year amortization period.
A low-ratio mortgage is a mortgage with a down payment of at least 20%. In addition to saving the cost of CMHC insurance premiums, a low-ratio mortgage also gives borrowers the option of an amortization period of up to 30 years.
How to get a 30-year mortgage in Canada
Here are the steps you’ll need to take to get a 30-year mortgage in Canada.
Save for your down payment: You’ll need enough cash for a 20% down payment, plus the closing costs of buying your new home. Depending on location, closing costs can be between 1% and 5% of the total purchase price.
Find a home in your price range: Once you’ve saved diligently, you’ll need to figure out how much you can afford. Use our mortgage affordability calculator to work out how much you can afford to buy with your current savings making up at least a 20% deposit.
Find a mortgage provider: While most mortgage providers will offer non-insured, 30-year mortgages, you’ll still need to find the best product for you. With a longer amortization period, your mortgage rate will be especially important, so be sure to compare mortgage rates between lenders.
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The bottom line
You can get a 30-year mortgage in Canada, but you will need at least a 20% deposit in order to avoid having to get CMHC insurance. While a 30-year mortgage might seem like a more affordable option, it can cost you more over time and will require more money up front.
It’s important to consider all of your options before you commit to a 30-year mortgage. Speak to a mortgage broker and test out different amortization schedule scenarios on our amortization calculator if you’re unsure. Mortgage broker consultations are free, and they can offer expert advice on your personal situation. They may also be able to find you a better mortgage rate if you’re ready to buy.
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