Budget 2026: a $1.5M limit for optional mortgage insurance and a foreign buyer ban to 2029 are proposed; missing-middle insurance changes start February 1, 2027

What happened

The federal government tabled Budget 2026 (titled “Masters of our destiny”) in Parliament on November 5, 2026. A budget is the government’s plan for how it will raise taxes and spend money. This article picks out the parts that matter to Korean-speaking clients buying, selling or renting in the GTA, using sentences checked directly in the budget documents (budget.canada.ca).

The most important point first. Most housing measures in the budget are proposals. They take effect only when a law or regulation changes. Only the mortgage insurance change for “missing middle” homes is one the budget says “will come into effect” on a set date (February 1, 2027), and even that has not started yet (and the budget calls one part of it a proposal — see ① below). Section 116 withholding and foreign property reporting (T1135) also have stated dates, but they are proposals that need changes to the Income Tax Act, so they would apply from those dates only if Parliament passes them. None of the housing rules covered here had changed as of today (November 6, 2026).

• Feb 1, 2027Start date for missing middle mortgage insurance changes (per the budget) — not yet in effect
• $1.5MProposed price limit for optional mortgage insurance (now $1M) — not law yet
• Jan 1, 2029Proposed end of the foreign buyer ban on existing homes (current law: repeal set for January 1, 2027)
• $13BProposed new capital for Build Canada Homes (10 years from 2028-29)

“Proposed” means it is not law yet. Details and dates can change, or be dropped, as Parliament passes laws or regulations change. The “Status” column uses the budget’s own words: proposes, announces, will come into effect.

The terms in plain words

• Federal budget: the government’s financial plan, presented to Parliament by the Minister of Finance. It mixes tax changes, spending plans and rule changes. Each one must become a law or regulation before it takes effect.
• Notice of Ways and Means Motion: a draft tax law that the government puts before Parliament first. It becomes law only after Parliament passes the bill and it receives royal assent.
• Mortgage default insurance: insurance that protects the lender if you cannot pay. It is required when your down payment is under 20% (high-ratio insurance). With 20% or more it is not required but can still be used (low-ratio insurance). We read the budget’s “optional mortgage insurance” as this low-ratio insurance (our interpretation; it matches the $1,000,000 limit in the current regulations).
• Amortization: the total time it takes to pay off the loan. A longer period means lower monthly payments but more interest overall.
• Missing middle: homes between a detached house and a high-rise condo in size, such as duplexes, triplexes, fourplexes (four-unit homes) and low-rise apartments.
• Non-market housing: public and non-profit housing whose goal is homes people can afford over time, not profit. The budget says it is about 4% of all homes in Canada.
• Withholding: when the buyer holds back part of the price and pays it to the Canada Revenue Agency (CRA) to cover the seller’s possible tax.

Mortgage rules: what changes, and when

There are five mortgage items. Only the first has a start date. Quotes from the budget are copied word for word.

• ① Missing middle homes (announced, set to start February 1, 2027): new mortgage insurance flexibility for three- and four-unit homes, and private insurers allowed to insure residential properties of 5 to 50 units. Budget text: "The Department of Finance Canada has published a technical backgrounder outlining the parameters for these changes, which will come into effect on February 1, 2027." The details are in Finance Canada’s technical backgrounder, which is on canada.ca and which we could not open. So we list no conditions beyond the example below.
• The budget’s own example (an illustration in the budget, not a real case): a builder wants to build a $3,000,000 fourplex. Under today’s rules the project cannot get insurance, because the value is over the $1,500,000 cap and the builder would have to live in one unit. In this example the budget says: "Budget 2026 proposes to expand access to insured construction financing for newly built three- and four-unit housing." With that change, the builder could get an insured loan for up to 90% of the value, with no price cap and no need to live there. Once built, the builder could rent all four units with an insured mortgage amortized over up to 30 years, or sell the homes one by one. Because the budget calls this part a proposal (“proposes”), the budget documents we could open do not show whether this wider construction financing is part of the February 1, 2027 change or a separate proposal still to come. They also do not say whether buyers of existing three- and four-unit homes are included.
• ② Price limit for optional mortgage insurance (proposed, no date): Budget text: "Budget 2026 proposes to amend mortgage insurance rules to raise the home price limit for optional mortgage insurance from $1 million to $1.5 million and permit 30-year amortisations for these insured mortgages, provided that at least one borrower is a first-time home buyer or the home is newly built." Today’s federal regulations (SOR/2012-281) say a low-ratio insured loan’s property value "must be less than $1,000,000", with up to 25 years for a purchase. High-ratio insurance (under 20% down) already allows homes under $1,500,000, and 30 years for first-time buyers or newly built homes.
• ③ Insured mortgage rate information (proposed): Budget text: "Budget 2026 proposes to establish new regulations to enhance publicly available information on insured mortgage rates, to be published by the Bank of Canada." New regulations are needed and there is no date.
• ④ CRA income verification (proposed): a service in which the CRA would sign agreements with lenders and mortgage insurers to confirm a borrower’s income. The budget "proposes" to amend the Canada Revenue Agency Act for this, and to spend $13M over three years from 2027-28 to build and pilot it.
• ⑤ Prepayment penalties (consultation only): Budget text: "Budget 2026 announces the government's intention to consult industry and stakeholders on potential reforms to improve transparency around prepayment penalties for insured mortgages." It only says it will consult. Nothing changes now.
• We found nothing in the budget documents that changes the mortgage stress test (the rate used to qualify for a loan).

Foreign buyers and owners who live abroad

Four items matter to foreign buyers and to owners who live outside Canada. All are proposals, and the current law still applies.

• Foreign buyer ban (proposed): Budget text: "Budget 2026 proposes to extend the ban on foreign purchases of existing residential properties for two years, to January 1, 2029, while exempting new residential properties." Today’s law (the Prohibition on the Purchase of Residential Property by Non-Canadians Act) has applied to new and existing homes since January 1, 2023, and under the Budget Implementation Act, 2024 it is set to be repealed on January 1, 2027. The budget would extend it to January 1, 2029 for existing homes only and exempt new homes. The government said it will propose legislation and start the regulatory process "in short order", but when it will pass, and when the new-home exemption would start, are not set. For now, new pre-construction homes are still covered by the ban.
• Section 116 withholding (proposed; if passed, dispositions on or after January 1, 2027): this would lower the share a buyer holds back when buying property from a non-resident. The tax measures document says "Budget 2026 proposes to reduce the withholding and remittance rates from 25 and 50 per cent to 15 and 30 per cent, respectively", but the draft law in the Ways and Means Motion limits this to sellers that are corporations. The buyer’s withholding is in draft subsection 116(5.6): "If the non-resident person referred to in either of those provisions is a corporation or if the purchaser referred to in subsection (5) or the taxpayer referred to in subsection (5.3), after reasonable inquiry, had no reason to believe that the non-resident person was not a corporation, the following rules apply: (a) the reference in subsection (5) to "25%" is to be read as a reference to "15%"; and (b) the reference in paragraph (5.3)(a) to "50%" is to be read as a reference to "30%"." In plain words: 25% becomes 15% and 50% becomes 30% if the seller is a non-resident corporation, or if the buyer checked with reasonable care and had no reason to believe the seller was not a corporation. (Draft subsection 116(5.5) is a separate rule: it changes the 25% the seller pays to get a CRA clearance certificate to 15%.) When an individual who lives in Korea or elsewhere sells a GTA home, it stays at 25% (50% for some property).
• Foreign property reporting, T1135 (proposed; if passed, tax years ending after 2026): Canadian residents must report to the CRA when the total cost of certain property they hold outside Canada is over a threshold. The budget would raise it from $100,000 to $200,000, and the simplified reporting limit from less than $250,000 to less than $500,000. The budget explains that personal property and property used in an active business are generally not included. This matters if you own a rental home or investments in Korea.
• Path to permanent residence (proposed): the budget says up to 200,000 temporary residents already in Canada would have a chance to become permanent residents by the end of 2027. Under current law, permanent residents are not covered by the foreign buyer ban.

The section 116 table shows the buyer’s withholding rate. No withholding is needed once the CRA issues a clearance certificate. This proposal is not law yet; if passed, it applies to dispositions on or after January 1, 2027. If your deal closes around that date, check with your lawyer.

Supply and rent: the numbers in the budget

The Budget in brief says the housing strategy will use "nearly $45 billion on a cash basis" (almost $45B). Everything below is proposed spending, and Parliament must approve it before the money flows.

• Build Canada Homes (the federal housing agency): $13B more over ten years on a cash basis, starting in 2028-29, to grow non-market housing. The budget says this puts Build Canada Homes on a path to 200,000 homes in the next decade, with total capital of $45B.
• Homelessness: on a path to end it within 10 years, the budget proposes $11.2B over four years from 2027-28, and $17.8B after that.
• Canada Housing Benefit: monthly rent help for low-income renters, renewed for 10 years: $1.7B over three years from 2028-29, and $3.9B after that.
• Federal land: $1.5B over four years from 2027-28, and $387.4M after that, for water, wastewater and roads on federal land for housing. Municipal e-permitting and AI get $100M over three years from 2027-28.
• Ontario: the budget says a new partnership with Ontario is cutting taxes on housing and reducing the cost of a home by up to $200,000. The budget does not say what was cut or by how much. If you are buying pre-construction or a new home, check with the builder and the city’s and province’s official sources.
• Market conditions (the budget’s economic and fiscal overview): housing starts averaged about 250,000 units in the first half of 2026, and asking rents fell about 8% nationally since the May 2024 peak, and 14% in Toronto from its own peak (each city’s peak is its highest monthly asking rent since September 2022; last data point September 2026). These are the budget’s summary of other data, so we did not chart them. The Bank of Canada raised its policy rate to 2.5% on October 28, 2026 (same document).
• Immigration: the 2027-2029 Immigration Levels Plan targets 370,000 new temporary residents and 380,000 permanent residents each year. These numbers relate to rental demand, so they are charted below.

What it means if you are buying, selling or renting in the GTA (explained)

This is not advice. It explains what the budget documents mean in plain words. Proposals can change, so base today’s decisions on today’s laws and rules.

• Buyers (20% or more down, homes from $1,000,000 to $1,500,000): the budget says a higher limit for optional mortgage insurance would mean more loans can be insured and more competition between lenders. But it is still a proposal with no date. Base your pre-approval and offer on today’s rules: low-ratio insurance under $1,000,000, 25 years (opinion).
• First-time buyers: first-time buyer GST relief (up to $50,000, in the budget’s words), the FHSA (First Home Savings Account) and the HBP (Home Buyers’ Plan, using RRSP savings) are unchanged in this budget. A 30-year amortization is already possible with high-ratio insurance for first-time buyers or newly built homes.
• Sellers: there is a proposal to raise the deposit insurance limit to $250,000 and to cover large sums held for a short time, such as money from a home sale. It needs a change to the CDIC Act and has no date. Before you park sale money, check the current coverage with your bank and CDIC. For individual sellers who live in Korea or elsewhere abroad, section 116 withholding does not change.
• Foreign buyers and pre-construction: the new-home exemption is only a proposal. Today new pre-construction homes are covered by the ban, and the current law is set to be repealed on January 1, 2027. If you sign or close in between, be sure to check the law in force that day with a lawyer (opinion).
• Building a multiplex (builders and small investors): if you plan construction financing or an insured rental mortgage after February 1, 2027, first check the conditions in Finance Canada’s technical backgrounder and your lender’s criteria. The budget calls the wider insured construction financing for newly built three- and four-unit housing a proposal, so also check when it starts. Until then, today’s rules apply.
• Renters: the budget says asking rents have fallen, and it lowers immigration targets. That alone does not change your rent. Increase limits follow Ontario law, so check the Ontario government’s official guidance. Renewing the Canada Housing Benefit for low-income renters is proposed spending from 2028-29.
• Rental property investors: the tax measures document has one rental-housing proposal. The EIFEL rules limit how much interest and financing expense certain taxpayers can deduct. Budget 2024 announced an exception for money borrowed to buy or build purpose-built rental housing, and the budget notes: "Neither exception has been enacted into law." (This covers the rental housing exception and a separate energy utility one.) Budget 2026 "proposes" to widen it to cover borrowing used for eligible activities carried on by another corporation, trust or partnership in the same group of affiliated entities (if passed, for taxation years that begin on or after October 1, 2023). This seems to matter mainly for investors who use corporate structures (our reading), and it is not law yet. Beyond that, we found no new tax deduction for rental buildings. The budget says its Productivity Mega Deduction (immediate expensing) excludes certain long-lived buildings (Chapter 1).

Not law yet, not changed, and who to check with

• Not law yet: the optional mortgage insurance limit and 30-year amortization, insured mortgage rate information, CRA income verification, the foreign buyer ban extension and new-home exemption, the section 116 corporate rates, the T1135 threshold, the rental housing interest deduction (EIFEL) exception and its expansion, the deposit insurance limit and all spending plans. The missing middle insurance change is not in effect before February 1, 2027, and within it the budget calls the wider insured construction financing for newly built three- and four-unit housing a proposal.
• Where we found no change in this budget: capital gains tax on real estate for individuals (inclusion rate), the principal residence exemption, the Underused Housing Tax (UHT), the GST/HST new housing rebate and rental building rebate, FHSA and HBP limits, the mortgage stress test and land transfer tax (provincial and city taxes). Our guides on these topics stay as they are.
• Ask your lender or mortgage broker: which insurance you can get now (high-ratio or low-ratio), the price limit and the amortization. For missing middle homes, the conditions after February 1, 2027.
• Ask a real estate lawyer: whether the foreign buyer ban and its exceptions apply to you, whether the seller is a resident and section 116 withholding, and what changes with your closing date.
• Ask an accountant: section 116 clearance certificates, T1135 filing and tax on deals made through a corporation.
• What to watch next: whether the bills are introduced and passed is on Parliament’s official website; mortgage insurance details are in Finance Canada’s technical backgrounder and CMHC announcements. This article reflects the budget documents of November 5, 2026.