Can I get a 30-year mortgage in Canada?

This piece was originally published on August 17, 2020, and was updated on September 10, 2024.

High-ratio vs. low-ratio mortgages

Two common terms used to describe 25- and 30-year mortgages in Canada are whether they’re high-ratio, or low-ratio. The “ratio” portion refers to the amount of debt a borrower has taken on in the mortgage: the mortgage to property value ratio.

A high-ratio mortgage – also referred to as an insured mortgage –  is when the borrower pays less than 20% down on their home’s purchase price, meaning they’ve needed to borrow a larger proportion of their mortgage, and  have less equity in the home.

Because this mortgage type poses a greater risk to the lender, high-ratio mortgage borrowers are also required 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.

However, the trade-off here is that this insurance coverage then eases the risk for lenders; should the borrower fail to make their mortgage payments, the money is then backstopped by the CMHC. As a result, insured mortgage rates tend to be a little bit lower than those that don’t require insurance. For example, the best five-year fixed insured mortgage rate available today is 4.19%, compared to 4.79% for an uninsured option.

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.

Can I lengthen my amortization when I renew my mortgage?

Yes, it is possible to change your original amortization period from 25 to 30 years, once you have built up at least 20% equity in your home. This is the case for many homeowners who may have purchased their home as an insured borrower, and then built up their equity via their payments over the years. Making accelerated payments, such as lump sums, or increasing your payment frequency to bi-weekly from monthly, can help achieve 20% equity sooner.

At that point, the borrower can choose to switch to an uninsured mortgage, and lengthen their amortization to 30 years if they wish. Borrowers can do this without penalty on their mortgage renewal date, or choose to break their mortgage mid-term and refinance, though they’ll need to pay applicable penalties to do so.

Check out our Mortgage Renewal calculator to see how changing your amortization schedule may impact your payments.

New government program allows 30-year mortgages for some insured borrowers – with a few limitations

As of August 1, 2024, a government program has been put into effect to allow some insured borrowers to extend their amortizations to 30 years, so long as they are first-time home buyers, and are purchasing a newly-constructed home.

The measure, officially called 30 Year Mortgages for First-Time Buyers of New Builds, was announced as part of the 2024 Federal Budget, with the intent of easing affordability challenges for the first-time home buyer segment.

“First-time home buyers will now have 30 years to pay off their mortgage, instead of 25,” Finance and Deputy Prime Minister Chrystia Freeland said when unveiling the measures. “That translates to lower monthly payments, so more younger Canadians can afford to pay that monthly mortgage on a new home.”

However, the effectiveness of the program remains to be seen, given newly-built construction exceeds the $1-million mark in many of Canada’s largest markets – a key criteria to qualify for an insured mortgage. As such, uptake for the program has been slow thus far.

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.

Can I extend my amortization if I'm having trouble paying my mortgage?

The short answer is yes – but it depends on your financial situation and the discretion of your lender. While brand-new mortgages are capped at either 25 or 30 years, once the mortgage contract is in place, your lender may offer you the opportunity to temporarily extend your amortization. This is generally used as an emergency tactic to help alleviate payment stress in scenarios where the borrower is at risk of defaulting on their mortgage payments.

Extending amortizations beyond 30 years was a growing trend between 2022 and early 2024 as a result of the Bank of Canada’s infamously steep 10-part hiking cycle. With each rate increase, borrowers with variable-rate mortgages and  fixed payment schedules saw less of their monthly payment go toward their principal debt, and more toward interest. Increasingly, these borrowers started to hit their “trigger rate” – the point at which their payment didn’t contribute to their principal debt at all, and only covered interest.

To address this, lenders worked closely with affected borrowers, extending their amortizations to rebalance their payments – an approach endorsed by the Financial Consumer Agency of Canada. However, these borrowers will eventually need to return to their original amortization schedule upon renewal, and will face rising payments once more at that time.

Carrying your mortgage for a longer period of time, while reducing your monthly payment obligations, will also cost you more in interest payments over time. A study by Ratehub.ca that looked at the theoretical impact of extra-long amortizations, found that increasing from a 25-year mortgage to a 30-year one reduced monthly payments on a $500,000* mortgage from $3,161 to $2,934, but increased the amount of interest paid to $556,153 from $448,196 – a difference of $107,957!

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.

Also read:

• Mortgage guide: Amortization
• Insured vs uninsured and insurable mortgages
• Federal government introduces 30-year mortgages for some insured borrowers
• Just how risky are longer mortgage amortizations?
• Should I extend my mortgage amortization?
• New FCAC mortgage protection guidelines: What borrowers should know
• How much interest would you pay on a 90-year mortgage?