Federal Budget 2026: What It Means for Your Mortgage
The federal government released Budget 2026 on November 4, and housing is a big part of it. Most of the budget will not change your day to day life, but a handful of measures speak directly to mortgages - how much you can borrow, what your payment looks like, and how you shop for a rate. Here is what matters, in plain language.
1. Insurable mortgages open up to homes priced up to $1.5 million
This is the biggest one for buyers with a larger down payment.
When you put 20% or more down, your mortgage can be insurable - your lender can insure it, and that insurance is what gives many lenders the confidence to offer their best rates. Today, insurable mortgages are capped at homes priced up to $1 million, with a maximum 25 year amortization.
Budget 2026 proposes raising that limit to $1.5 million, and allowing 30 year amortizations on these insurable mortgages, as long as at least one borrower is a first-time home buyer or the home is newly built.
To be clear, this is different from an insured mortgage: if you put less than 20% down, your insured mortgage already covers homes up to $1.5 million - that change came in December 2024. This budget closes the same gap for buyers putting 20% or more down.
What that means in practice: if you are buying in the $1 million to $1.5 million range - very common in the GTA - you may soon have access to insurable mortgage pricing and a 30 year amortization, which lowers your monthly payment compared to a 25 year amortization.
2. New financing for small multi-unit builds (starts February 1, 2027)
The government is moving ahead with mortgage insurance changes for "missing middle" housing:
New insured construction financing for newly built 3 and 4 unit homes - up to 90% of the property value, with no maximum property value and no requirement for the builder to live in one of the units
Once built, the owner can keep the property with an insured mortgage amortized over up to 30 years, or sell the homes individually
Private mortgage insurers will be able to offer mortgage loan insurance on 5 to 50 unit residential properties
These changes take effect February 1, 2027. If you are a small-scale builder, or thinking about a multi-unit property, this changes the financing math.
3. The Bank of Canada will publish insured mortgage rates
Budget 2026 proposes new regulations so that information on insured mortgage rates is published by the Bank of Canada. The idea is simple: better, more timely rate information makes it easier to compare lenders and shop for the best rate instead of guessing.
4. CRA income verification is coming to mortgage applications
The government proposes giving the CRA the authority to provide an income verification service directly to mortgage lenders and insurers, with $13 million over 3 years to develop and pilot it.
For you, that could mean a smoother application with less back and forth on income documents. For the system, it helps deter mortgage fraud.
5. Prepayment penalties under the microscope
The government announced it will consult on reforms to make prepayment penalties on insured mortgages more transparent, so you can understand and compare the real cost of paying off your mortgage early before you sign, not after.
Also worth knowing
The ban on foreign purchases of existing homes is extended 2 more years, to January 1, 2029. Newly built homes are exempt.
The GST relief for first-time buyers on new homes stays in place - savings of up to $50,000 on a new build.
Deposit insurance is proposed to increase to $250,000, including temporary higher coverage for life events like the sale of a home. Good news if you are holding sale proceeds or a large down payment in a bank account.
The bottom line
Most of these are proposals, so the final rules and start dates will come as the government publishes the details - the multi-unit insurance changes already have a firm date of February 1, 2027. The direction is clear though: more flexibility on insured and insurable mortgages, more transparency on rates and penalties, and more financing for the smaller multi-unit homes our communities need.
If you are planning a purchase, a renewal, or a small build and want to know how any of this applies to you, book a quick call and we will walk through it together.
Snezhana Todorova
647-893-2535
[email protected]