The amortization is the number of years it would take to pay off your mortgage if the payments never changed. For years the standard in Canada has been 25. A 30-year amortization lowers the payment and helps you qualify for more, but it costs more interest. Whether you can choose it depends mostly on the size of your down payment.
Who can get a 30-year amortization
With less than 20% down (insured mortgages)
If your down payment is under 20%, your mortgage needs default insurance, and insured mortgages have long been capped at 25 years. The federal government relaxed that in two steps:
- August 1, 2024: 30 years became available to first-time buyers purchasing a newly built home.
- December 15, 2024: eligibility was widened to all first-time buyers and all buyers of newly built homes, for insurance applications submitted on or after that date. The same change raised the price cap for insured mortgages from $1 million to $1.5 million.
For this rule, you’re a first-time buyer if you have never bought a home, or you haven’t lived in a home that you or your current spouse or common-law partner owned as a principal residence in the last four years, or you’ve recently gone through the breakdown of a marriage or common-law partnership. A new build is a home that hasn’t previously been lived in. The home must be occupied by you or a close relative, and all the other insurance rules still apply.
The 30-year option comes with a higher insurance premium. When it introduced the option in 2024, CMHC announced a surcharge of 0.20% (20 basis points) on top of the normal premium. Your lender will confirm the exact premium when you apply.
With 20% or more down (uninsured mortgages)
The 25-year cap is a rule for insured mortgages. With at least 20% down, the length of the amortization is up to the lender, and many offer 30 years to buyers who qualify. Some charge a slightly higher rate for it. Check with your lender or broker.
25 vs 30 years on a $600,000 mortgage
Assume a $600,000 mortgage at 4.49%, monthly payments, and the rate staying the same for the whole amortization. That assumption is never exactly true, because you’ll renew several times, but it isolates the effect of the extra five years.
| 25 years | 30 years | |
|---|---|---|
| Monthly payment | $3,317.50 | $3,021.80 |
| Total interest | $395,251 | $487,849 |
| Principal repaid in the first 5 years | $73,309 | $53,480 |
| Balance at the first renewal (5 years) | $526,691 | $546,520 |
| Payment at the stress-test rate (6.49%) | $4,015.31 | $3,754.59 |
The 30-year amortization saves $295.70 a month but costs about $92,600 more interest over the life of the loan. It also builds equity more slowly: after five years you would owe about $19,800 more, which matters if prices fall or you need to refinance.
The last row is why buyers choose it. Lenders test you at the greater of your rate plus 2% or 5.25%. At 30 years the qualifying payment is about $261 a month lower, which can be the difference between being approved and not.
Worked example: a first-time buyer with 10% down
Maya is a first-time buyer purchasing a $630,000 condo with $63,000 down. Her mortgage before insurance is $567,000, at a 4.49% rate.
- 25 years: the premium at 10% down is 3.10%, or $17,577. Her mortgage is $584,577 and the payment is $3,232.23 a month.
- 30 years: the premium rises to 3.30%, or $18,711. Her mortgage is $585,711 and the payment is $2,949.84 a month.
Choosing 30 years costs Maya $1,134 more in premium up front and about $91,000 more interest over the full amortization at an unchanged rate, in exchange for paying $282 less each month. In Ontario, Quebec and Saskatchewan, provincial sales tax also applies to the premium and must be paid in cash at closing. Try your own numbers in the CMHC insurance calculator.
When a 30-year amortization makes sense
- You need it to qualify and you’re confident your income will grow.
- You want a lower required payment as a cushion, and you have the discipline to prepay. Most closed mortgages let you make lump-sum payments or raise your payment each year without penalty, which can shorten the amortization back toward 25 years. See the prepayment calculator.
- You have higher-interest debt to clear first, and the monthly saving goes to it.
It makes less sense if the 25-year payment fits comfortably, or if the lower payment would simply be spent. In that case the extra five years only add interest.
Shortening it later
A 30-year amortization isn’t permanent. You can switch to accelerated biweekly payments, use your annual prepayment privileges, or ask for a shorter amortization at renewal (which raises the payment). Compare schedules in the amortization schedule calculator.
Sources: Department of Finance, Delivering the boldest mortgage reforms in decades; Department of Finance, 30-year amortizations for insured mortgages; CMHC, revised homeowner premiums (20 basis point surcharge); CMHC, mortgage loan insurance cost; OSFI, minimum qualifying rate.