Housing was a key focus for the federal government’s newly-released Budget 2026, which proposed changes to the foreign buyer ban and mortgage rules, and new investment into housing construction.
“There’s a lot to like in this budget as it relates to housing. It’s great to see more favourable financing options become available for smaller scale development, which remains an under-supplied segment of the market in our region,” said Andrew Lis, GVR chief economist and vice-president data analytics. “We also welcome the tweaks to the foreign-buyer prohibition, which will allow investment in new development and should help support the construction of new homes.”
Here's what you need to know.
New homes exempted in foreign buyer ban, extended to 2029
The federal government is proposing to extend the foreign buyer ban to January 1, 2029, but would allow an exemption for purchasing new homes.
The government says this change is intended to keep existing homes available to Canadian buyers while encouraging foreign investment in new housing construction.
While Budget 2026 outlines no specific dates, the current foreign buyer ban expires on January 1, 2027. To implement these changes, the government plans to introduce legislation and begin the regulatory process soon.
Mortgage insurance changes could give buyers more flexibility
The budget also proposes several changes to mortgage rules aimed at increasing competition between lenders and giving homebuyers more financing options.
The proposed changes include:
- Increasing the home price limit for optional mortgage insurance from $1 million to $1.5 million.
- Allowing 30-year amortizations for these insured mortgages when at least one borrower is a first-time homebuyer or the property is newly built.
- Requiring more publicly available information on insured mortgage rates to help borrowers compare options.
- Developing a Canada Revenue Agency service to help lenders verify mortgage applicants' income and prevent fraud.
The government also plans to consult on improving transparency around mortgage prepayment penalties. Their intention is to help borrowers better understand the costs of paying off their mortgages early.
These measures are proposals, and the government has not announced implementation dates.
New mortgage rules aimed at “missing middle” housing
Starting February 1, 2027, new mortgage insurance rules will expand financing options for smaller multi-unit “missing middle” housing projects like multiplexes and townhomes.
The changes will:
- Remove maximum property value and owner-occupancy requirements for mortgage insurance on eligible newly built three- and four-unit properties, and
- Permit private insurers to provide mortgage insurance for properties containing five to 50 residential units.
The government believes these changes will make it easier for builders and investors interested in smaller multi-unit residential projects to secure financing.
More investment in housing supply
Budget 2026 also outlines $44.7 billion in housing investments over 11 years, including an additional $13 billion over 10 years for Build Canada Homes.
The government aims to deliver 200,000 new homes over the next decade through Build Canada Homes and expand affordable and non-market housing.
“It’s encouraging to see greater investment in non-market housing and housing-related infrastructure, both of which have seen under-investment for many years,” said Lis. “All in all, it’s an encouraging and ambitious budget. Whether it lives up to its expectations in the coming years will of course be the ultimate test.”
What happens next?
Budget 2026 outlines the high-level priorities for government spending in the coming year. Several of these proposals still require legislation, regulatory changes, or further implementation plans.
We'll continue monitoring developments and share updates as more details become available.