Canada’s federal government has proposed changes to mortgage insurance, lending transparency and income verification as part of Budget 2026, aiming to make home financing more accessible and easier to compare.
The measures include increasing the home price limit for optional mortgage insurance to C$1.5 mn, expanding access to 30-year amortizations for eligible borrowers and introducing new public reporting requirements for insured mortgage rates.
- Canada proposes raising the home price limit for optional mortgage insurance from C$1 mn to C$1.5 mn and allowing 30-year amortizations for eligible buyers.
- The Bank of Canada would publish more information on insured mortgage rates to help borrowers compare offers from lenders.
- The government plans a C$13 mn CRA income verification pilot and consultations on mortgage prepayment penalties.
The proposals also address mortgage application procedures and the costs borrowers face when repaying loans ahead of schedule.
Canada proposes C$1.5 mn mortgage insurance limit
One of the central proposals would increase the home price threshold for optional mortgage insurance from C$1 mn to C$1.5 mn.
The government also wants to permit 30-year amortizations for mortgages covered by this insurance, provided that at least one borrower is purchasing a home for the first time or the property is newly constructed.
Extending the repayment period from 25 to 30 years can reduce monthly mortgage payments, potentially improving affordability for qualifying buyers. However, a longer amortization generally means paying more interest over the life of the loan, assuming the same borrowing amount and interest rate.
The changes are intended to increase competition among mortgage lenders and give borrowers additional financing options.
They remain budget proposals and would require changes to the applicable mortgage insurance rules before taking effect.
Bank of Canada to publish more mortgage rate information
Budget 2026 proposes new regulations requiring more comprehensive public information on insured mortgage rates, with the data to be published by the Bank of Canada.
The measure is designed to make mortgage pricing easier to compare and help borrowers assess offers from different financial institutions.
Greater visibility into available rates could strengthen competition among lenders, particularly for buyers who struggle to evaluate differences between mortgage products.
Mortgage affordability depends on more than the advertised interest rate. Amortization periods, repayment conditions and potential penalties can also materially affect the total cost of borrowing.
CRA to develop C$13 mn mortgage income verification pilot
The government is proposing amendments to the Canada Revenue Agency Act that would authorize the Canada Revenue Agency to establish an income verification service for mortgage lenders and mortgage insurers.
Budget 2026 allocates C$13 mn over three years, beginning in fiscal 2027–28, to develop and pilot the service.
The proposed system would allow participating financial institutions to verify borrowers’ income information through arrangements with the CRA.
According to the government, the initiative could simplify mortgage applications, improve the reliability of income assessments and reduce the risk of mortgage fraud.
Following the pilot phase, Ottawa intends for the service to be financed through arrangements with participating industry institutions.
Government considers changes to mortgage prepayment penalties
Budget 2026 also outlines plans to consult lenders and other stakeholders on reforms to improve transparency around mortgage prepayment penalties.
These charges can apply when borrowers repay their mortgages early, exceed permitted prepayment amounts or break certain mortgage contracts before the end of their terms.
The government wants consumers to have clearer information about potential penalties before choosing a mortgage product.
Improved disclosure could help homeowners compare the costs of refinancing, switching lenders or paying down debt ahead of schedule.
Together, the proposed measures aim to give Canadian homebuyers more flexibility while improving transparency throughout the mortgage process. Their impact on affordability will depend on the final regulations, lender participation and the terms offered to eligible borrowers.
