Ask the mortgage expert: How to buy a home in 2026, between budgets, builders, and opportunities

Ask the Expert is a monthly column where Steve Garganis, lead mortgage planner at Mortgage Architects and founder of CanadaMortgageNews.ca dives into what’s going on with mortgage rates and the Canadian housing market. Have a question for Steve on home buying and your mortgage? Reach out to us at media@rates.ca.

Every year, homebuyers across Canada hold out for the silver bullet—a policy change that will suddenly make the path to homeownership clearer.

From tax reforms to supply-side stimulus, the landscape is changing. The question is: Are these changes enough to bridge the gap between supply and demand, and how can you leverage them to your advantage?

While there is rarely a single "fix" for a market as complex as ours, the most recent budget cycles and policy updates have introduced significant shifts that every homebuyer needs to understand.

Federal housing policy in 2026: a targeted approach

We have heard a lot about the "Liberal Housing Plan" since Prime Minister Mark Carney first began consulting on the "Building Canada Strong" framework. The rhetoric has shifted from broad targets to specific financial levers designed to unclog the system.

Here is what has changed and what is on the table for you.

1. 30-year amortizations: who qualifies now and why it matters

This is the game changer many buyers have been waiting for. Initially, the extended amortization was limited, but the rules have expanded significantly to help improve monthly affordability.

As of the latest mortgage rule updates (December 2024), 30-year amortizations are now available to:

1. All first-time homebuyers: Whether you are buying a new build OR a resale home, if you are a first-time buyer with an insured mortgage (less than 20% down), you can now access a 30-year amortization.
2. All buyers of new builds: Even if you are not a first-time buyer, if you purchase a newly constructed home, you are eligible for a 30-year amortization.

• Why it matters: This lowers your monthly payment obligation, which in turn helps you qualify for a larger mortgage amount. It effectively increases your buying power in a high-interest environment.

Read more: Mortgage Amortization: Should You Go Long or Short?

2. The GST removal for first-time buyers

Perhaps the most significant development for buyers in recent history is the initiative to remove the GST on new homes for First-Time Homebuyers (FTHB).

On May 27, 2025, the federal government announced legislative proposals to eliminate the Goods and Services Tax (GST) for first-time buyers on new homes valued up to $1 million.

• The specifics: For homes priced up to $1 million, the rebate is 100% of the 5% GST. On a $900,000 pre-construction townhome, you are saving **$45,000** upfront.
• The phase-out: For homes valued between $1 million and $1.5 million, the rebate is progressively reduced.
• Why it matters: Previously, the "New Housing Rebate" was capped at such low property values (often under $450,000) that it was virtually useless in Toronto or Vancouver. This new policy acknowledges the reality of current pricing.

3. Restimulating homebuilders to increase housing supply

The government has set an ambitious target of reaching 500,000 housing completions per year. To achieve this, we are seeing a pivot toward "industrial strategy" in housing.

• Pre-fabricated construction: Significant investments are being funneled into factory-built housing technologies to speed up construction timelines.

• Cutting red tape: A major component of the plan involves digitizing the permitting process to reduce the "time tax" that delays projects by years.

   

Resale vs. new build: comparing the numbers 

Given these changes, does it make more sense to buy a Resale home or a New Build? Let's run the numbers using the GST removal initiative and the 30-year amortization to see how it impacts your bottom line.

The scenario: First-time buyer at $800,000

You are a First-Time Homebuyer looking at a purchase price of $800,000 in Ontario with a $60,000 down payment. We are comparing an identical mortgage rate for both scenarios.

Related: How much down payment do I need?

The takeaway:

This is where the policy changes really shine. Previously, Option B (New Build) would have cost you significantly more upfront due to the GST. Now, thanks to the GST removal, the playing field is leveled.

Since First-Time Homebuyers can now use a 30-year amortization on both resale and new homes, the monthly payments are identical in this scenario. This gives you the freedom to choose the lifestyle you want, either in an established neighbourhood or a brand-new modern home — without being penalized by tax or qualification hurdles.

Your 2026 housing toolkit: Canadian home buyer incentive programs

There are several tools currently available to help you bridge the affordability gap. Ensure you are utilizing every single one.

1. The RRSP Home Buyers’ Plan (HBP)

• The benefit: Withdraw up to $60,000 from your RRSP tax-free to buy your first home.
• The details: This limit was recently increased from $35,000, significantly boosting your available down payment. Repayment starts 2 to 5 years after purchase.

2. The First Home Savings Account (FHSA)

• The benefit: Tax-deductible contributions (like an RRSP) and tax-free withdrawals (like a TFSA).
• The details: Contribute up to $8,000/year (Lifetime max: $40,000). If you don't use it for a home, it rolls into your RRSP tax-free.

3. Land Transfer Tax Rebates

• The benefit: Immediate reduction in closing costs.
• The details: First-time buyers in Ontario receive up to $4,000. Buyers in Toronto receive an additional rebate of up to $4,475, for a total savings of $8,475.

The verdict: a window of opportunity

While the data shows a challenging long-term trend in affordability, the current combination of stabilizing interest rates, new tax incentives, and a softening rental market creates a unique window for buyers who are prepared.

The expansion of the 30-year amortization to all buyers of new builds (and all first-time buyers) is a critical tool that finally acknowledges the reality of modern home prices. Combined with the removal of the GST for first-time buyers, the government has effectively lowered the barrier to entry for the first time in years.

The "wild west" of runaway price appreciation may be pausing, but for a savvy homebuyer, a balanced market is actually a better place to be. You have the tools, you have the data, and now, with these new incentives, you have a clearer path forward.

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