Introduction
For many first-time home buyers, qualifying for a mortgage that meets their needs can be a challenge. With rising home prices, especially in cities like Vancouver and Toronto, affordability remains a significant concern. However, the return of 30-year amortizations for insured mortgages in 2024 has given buyers an opportunity to qualify for more while keeping monthly payments manageable.
What is a 30-Year Amortization?
In simple terms, amortization refers to the length of time it takes to pay off your mortgage. A 30-year amortization spreads payments out over a longer period than the more common 25-year term, reducing the monthly payment amount and allowing buyers to qualify for a higher purchase price.
How Does a 30-Year Mortgage Affect Your Buying Power?
One of the biggest benefits of a 30-year mortgage is the increased qualification amount. For example, if you earn $100,000 per year, a 25-year amortization might allow you to qualify for a $430,000 home. However, with a 30-year amortization, that amount could increase to $460,000—giving you an extra $30,000 to work with when purchasing a home.
Comparison of 25-Year vs. 30-Year Amortizations
- 25-Year Amortization: Lower overall interest paid but higher monthly payments.
- 30-Year Amortization: Higher overall interest but lower monthly payments and increased qualification amount.
Why Edmonton Remains an Affordable Housing Market
Compared to major Canadian cities like Vancouver and Toronto, Edmonton still offers relatively affordable housing. In January 2025, the average price of a single-family home in Vancouver was around $2 million, while the average household income remained significantly lower. Meanwhile, in Edmonton, homes remain much more accessible, with prices aligning closer to 4.3 times the average household income.
How to Pay Off a 30-Year Mortgage Faster
Many buyers worry about the extra five years of payments that come with a 30-year mortgage. However, you can still pay it off in 25 years or less by making extra payments. For instance, if you purchase a $500,000 home with a 30-year amortization, simply adding $250 per month to your mortgage payments can bring your amortization back down to 25 years.
Tips for Accelerating Your Mortgage Payoff
- Make bi-weekly payments instead of monthly payments.
- Increase your payment amount when your income rises.
- Use lump sum payments whenever possible.
Final Thoughts
A 30-year amortization can be a valuable tool for first-time buyers looking to enter the market sooner. While it does come with the potential for higher overall interest costs, strategic repayment strategies can help offset that downside. If you’re considering buying a home in 2025, it’s worth exploring how a 30-year amortization could work for you.
Watch Our Full Video for More Insights
For a detailed breakdown and visual comparison, watch our latest YouTube video where we dive deeper into the numbers and strategies for maximizing your mortgage potential.
Need Mortgage Advice?
If you have questions about mortgage options, amortization terms, or qualifying for a home, feel free to reach out. We’re happy to help you navigate the home-buying process.
