Budget 2026 Mortgage Rules: 6 Changes and Who They Help
What Changed for Mortgages in Budget 2026?
The federal budget released on November 5, 2026 makes 6 changes to Canada's mortgage rules. The biggest one is for rental buyers. Starting February 1, 2027, a newly built triplex or fourplex can be insured at 90% of its value, which means 10% down, with a 30-year amortization, no price limit and no need to live in one of the units. Private mortgage insurers can also start insuring new rental buildings of 5 to 50 units on that date. The other 4 changes are proposals with no start date yet: the 20%-down insurance limit moving to $1.5 million, the CRA confirming your income for lenders, a consultation on prepayment penalties, and more public data on insured mortgage rates. Some of these rules have sat in the same place since 2012, so this is the first real movement in years, even if most of it isn't in force yet.
Key Takeaways
- New fourplexes with 10% down: From February 1, 2027, new 3 and 4 unit homes can be insured up to 90% with a 30-year amortization, no price cap and no owner-occupancy rule.
- 5 to 50 units: Private insurers can insure multi-unit rentals of 5 to 50 units from February 1, 2027, where before this was mostly CMHC's program.
- The $1 million line moves to $1.5 million: Optional insurance on mortgages with 20% or more down is proposed up to $1.5 million, with 30 years for first-time buyers or new homes. No start date yet.
- CRA income checks: The CRA would confirm your income directly with lenders and insurers, after a law change and a 3-year, $13 million build.
- Penalties and rate data: A consultation on clearer penalties for insured mortgages, and more insured rate data published by the Bank of Canada.
How Does the Fourplex Rule Work Today?
If you buy a rental with 2 to 4 units today, CMHC will insure it, but only up to 80% of the value, so insurance doesn't lower your down payment at all. A single-unit rental, like a condo you rent out, can't be insured. That's why every rental conversation I have starts with the down payment: you put 20% down, and rentals usually carry a higher rate than a home you live in.
The Spring Economic Update in April 2026 said the government wanted more flexibility for new triplexes and fourplexes. On November 5, Finance Canada published the numbers. From February 1, 2027, a newly built 3 or 4 unit home can be insured at 90%, which is 10% down, amortized over 30 years, with no price limit, and you don't have to live in it. The budget also extends this to insured construction financing for these builds, so a small builder can borrow up to 90% of the value to build, then keep the units as rentals or sell them.
What does 10% down look like on a $2 million fourplex?
On a $2 million new fourplex, 20% down today is $400,000. After February 1, 2027, 10% down is $200,000, plus an insurance premium that hasn't been published yet. Picture 2 investors. One buys a resale fourplex and puts $400,000 down. The other buys a new one, puts $200,000 down and keeps $200,000 for the next property. Keep in mind that this is for new builds only. A resale fourplex doesn't get the new rules.
I own rentals myself, and I stretch every mortgage back to 30 years because it frees up cash flow. The tenant is paying it down either way, and the lower payment can make it easier to qualify for the next property.
Will it be easier to qualify?
No, and this is the part I think people will get wrong. These mortgages are insured, so you qualify under insured rules. Your housing costs can't be more than 39% of your income and your total debts can't be more than 44%, at the stress-tested rate. On an uninsured mortgage, some lenders can go up to 46% or 48%. Lenders also count only part of the rent toward your income, and many people expect rent to help more than it does. The rule lowers the down payment, and it doesn't make the qualifying math any easier.
We also don't know yet what the rental premium will be, which lenders will offer it, or how strict each insurer's own rules will be, since insurers can set guidelines tighter than the federal minimum. My guess is that builders and owners who already have equity to pull will use this first.
What Changes for Buildings With 5 to 50 Units?
In March 2022, CMHC launched MLI Select for buildings with 5 or more units. If a building scores enough points on affordability, energy and accessibility, it can be financed up to 95% over as long as 50 years. CMHC has been the main insurer for these buildings. The April update said private insurers could come in on 5 to 8 units, and the November 5 announcement takes that up to 50 units.
From February 1, 2027, private insurers can insure 5 to 50 unit rentals. New construction can go up to 90% over 50 years, and existing buildings up to 85% over 40 years. You'll need a net worth of at least 25% of the loan, with a $100,000 minimum, and the rent has to cover the mortgage payment 1.15 times on a 5-year term. More insurers can mean more lenders and more competition, which is good news for anyone who has sat in a 3 to 6 month queue waiting on an approval. Most homeowners won't use this one, but it could bring more rental buildings to market over time.
What Happens to the $1 Million Line?
In July 2012, Ottawa limited insured mortgages to homes under $1 million and cut the longest amortization to 25 years. In 2016, the same limits were applied to mortgages with 20% or more down that a lender chose to insure on its own side, which is how many lenders fund those mortgages more cheaply. In December 2024, the cap for buyers with less than 20% down moved up to $1.5 million, but the line for 20%-down mortgages stayed at $1 million.
That left a strange gap. In Vancouver and Toronto, plenty of homes sell between $1 million and $1.5 million, and if you put 20% down on one of them today, the lender can't insure it. You'd often pay more than the buyer putting less down. The budget proposes raising that limit to $1.5 million, with 30-year amortizations when at least 1 borrower is a first-time buyer or the home is newly built. That could change which lenders take your mortgage and what terms they offer. There's no start date yet, and refinances still aren't included, which is a miss.
How Will the CRA Check Your Income?
In 2017, a large alternative lender disclosed that 45 brokers had sent in applications with false income, and it nearly took the company down. In 2018, CMHC said the notice of assessment you print off the CRA website was easy to fake and asked the CRA to confirm income directly. In the US and the UK, the tax agency already does this with your permission. The 2024 budget promised a consultation, and fake documents stayed the biggest fraud problem.
Budget 2026 proposes changing the Canada Revenue Agency Act so the CRA can confirm your income with lenders and mortgage insurers, with $13 million over 3 years starting in 2027-28 to build and test it. Today you send us your notice of assessment and 2 years of full T1 returns, and most people don't know where to find them. The catch is that this won't help much if you're self-employed or write off expenses, because we'll still need the full returns. It needs a law change first, so there's no start date, and the budget names lenders and insurers, not brokers. If brokers are left out, it'll probably add a step to your application instead of removing one.
Will Mortgage Penalties Get Clearer?
In 2010, the government promised to make prepayment penalties clear. What came out of it was a voluntary code the banks signed in 2012 and 2013. It makes a lender tell you how it calculated your penalty, but it doesn't say how the penalty has to be calculated. Many of the big banks use their posted rate, the rate on the sign, instead of the rate you're paying, so your penalty can jump when posted rates change.
Budget 2026 says the government will consult on clearer penalties for insured mortgages. That leaves out uninsured mortgages, where many large penalties sit. My view is that it should be clear for everyone, and a penalty of 3, 4 or 5 months of interest would be easier to understand than the formulas used now.
What Are the Other Changes?
Insured rate data. The budget proposes new rules so the Bank of Canada publishes more information on insured mortgage rates, so borrowers can see what other people are paying. There are no details and no start date yet.
Foreign buyer ban. The ban on existing homes is proposed to run to January 1, 2029, while newly built homes would be exempt. I covered this in full in a separate post on the foreign buyer ban and condo prices.
Deposit insurance. Coverage is $100,000 per bank today. The budget proposes $250,000, plus temporary cover for larger balances after events like selling a home. If your sale money sits in your account for a few weeks before you close on the next home, this is the gap it's meant to cover. The amount and length of that temporary cover aren't set yet.
Who Should Move First?
- Building or buying a new fourplex: If your application can wait until after February 1, 2027 and you need the cash, start planning now and have us estimate what you'd qualify for, then submit once the rules are in force.
- Buying between $1 million and $1.5 million with 20% down: Ask your broker how your mortgage is being funded. The new limit could help later, but with no start date, it's probably not worth waiting for.
- Self-employed and buying in the next 2 years: Plan your write-offs as you always would. I don't expect the CRA change to move your qualification much.
- Breaking a mortgage: Ask how your penalty is calculated. I don't expect big changes here in the near term.
Frequently Asked Questions
When do the new fourplex mortgage rules start?
February 1, 2027, for newly built 3 and 4 unit homes, according to Finance Canada's November 5, 2026 announcement. Resale properties aren't included.
Do I have to live in the fourplex to get 10% down?
No. The new rules remove the owner-occupancy requirement for newly built 3 and 4 unit homes, so all 4 units can be rentals.
Is the $1.5 million limit for 20% down in effect now?
No. It's a proposal in Budget 2026 with no start date yet. Until it takes effect, mortgages with 20% or more down on homes over $1 million can't be insured.
Will the CRA share my tax information with my broker?
As written, the budget lets the CRA confirm income with lenders and mortgage insurers. Whether brokers get access hasn't been decided.
Sources: Budget 2026, Chapter 3; Budget 2026, Annex 3; Finance Canada, "Mortgage Insurance Rule Changes to Support Missing Middle Housing," November 5, 2026. The $2 million example uses round numbers. Proposals need legislation or regulations before they take effect.
By Alex McFadyen, Mortgage Broker & CEO, Flow Mortgage Co.
What to do next
If you have equity in your home and want to see how a new fourplex or rental could fit, run your numbers in our investment property check or read the HELOC vs refinance guide. If you want a second set of eyes, book a free call and we'll go through it with you.