Budget 2026 and Toronto Real Estate: Foreign Buyer Ban Extended, New Homes Exempted

The short answer: Federal Budget 2026, tabled on November 5, proposes to extend Canada's ban on foreign purchases of existing homes by two years, to January 1, 2029, while exempting new residential properties. It also proposes raising the price limit for optional mortgage insurance from $1 million to $1.5 million with 30-year amortizations when at least one borrower is a first-time buyer or the home is newly built, and it confirms new mortgage insurance rules for multiplexes starting February 1, 2027. In Toronto, foreign buyers still face Ontario's 25% Non-Resident Speculation Tax and the City's 10% Municipal Non-Resident Speculation Tax, so the new-home exemption does not make Toronto purchases cheap for non-residents. Several of these measures are proposals that still need legislation or regulations.

This post is written by The Starke Group, the Toronto real estate team led by Brett Starke and powered by RARE Real Estate Inc. We have stuck to what the Budget 2026 document (Chapter 3) and the Department of Finance technical backgrounder actually say, and we have flagged what is not yet decided.

What does Budget 2026 change about the foreign buyer ban?

The Prohibition on the Purchase of Residential Property by Non-Canadians Act took effect on January 1, 2023, and was previously extended to January 1, 2027. According to CMHC, it applies to residential buildings with up to three dwelling units, including condo units and semi-detached houses, in census metropolitan areas and census agglomerations such as Toronto, with certain exceptions.

Budget 2026 proposes two changes:

• A two-year extension. The ban on foreign purchases of existing residential properties would continue to January 1, 2029.
• An exemption for new homes. Purchases of new residential properties would no longer be prohibited. The budget says this keeps "the vast majority of the market available for Canadians, while unlocking additional investment in new housing supply."

The government says it will propose legislation and launch a regulatory process "in short order." The budget does not say when the exemption would take effect, and as law firm Aird & Berlis notes, it is not yet clear what will count as a "new residential property." Until the rules are written, the current prohibition and its exceptions continue to apply.

Does the new-home exemption open Toronto to foreign buyers?

Not in a simple way. Federal rules are only one layer. In Ontario, the provincial Non-Resident Speculation Tax (NRST) has been 25% of the purchase price since October 25, 2022, and it applies anywhere in the province. In the City of Toronto, a 10% Municipal Non-Resident Speculation Tax (MNRST) has applied to foreign buyers of certain residential properties since January 1, 2025, on top of the regular land transfer taxes.

Budget 2026 did not change either tax, and the budget itself says the government will "continue to support a range of policy measures, such as those levied by other levels of government." So even if a new Toronto condo becomes legal for a foreign buyer to purchase federally, that buyer would still face roughly 35% in provincial and municipal speculation taxes on the purchase price, plus regular Ontario and Toronto land transfer tax. Whether that brings meaningful foreign demand to new Toronto condos is an open question.

What changes for mortgages?

The budget's "Helping Canadians get an affordable mortgage" section proposes several measures:

• Optional mortgage insurance up to $1.5 million. The budget proposes raising the home price limit for optional mortgage insurance from $1 million to $1.5 million, and permitting 30-year amortizations on these insured mortgages if at least one borrower is a first-time home buyer or the home is newly built. Optional insurance is generally used on mortgages where the buyer puts down at least 20%, as the Toronto Regional Real Estate Board (TRREB) explained in its November 6 response. The stated goal is more lender competition and buyer flexibility.
• Better rate information. New regulations would have the Bank of Canada publish more information on insured mortgage rates, to help borrowers compare.
• Income verification. The Canada Revenue Agency would get authority to offer an income verification service to lenders and insurers, with $13 million over three years for a pilot.
• Prepayment penalties. The government intends to consult on making prepayment penalties on insured mortgages more transparent.

The budget does not give a start date for the $1.5 million optional insurance change. It is separate from the rules that took effect in December 2024, which already set a $1.5 million cap for insured mortgages with less than 20% down. We covered how mortgage insurance and the 8% Ontario tax on premiums work in our Toronto closing costs guide for first-time buyers.

What are the new "missing middle" mortgage insurance rules?

These are already set, with a firm date. The Finance Canada backgrounder says the new products apply to mortgage insurance applications that lenders submit on or after February 1, 2027:

• New triplexes and fourplexes: insured financing to build or buy newly built three- and four-unit homes, up to 90% of projected value on completion, no owner-occupancy requirement, no maximum property value, and up to 30-year amortization. For purchase loans, debt service limits (39% GDS, 44% TDS), the minimum qualifying rate and a 600 minimum credit score apply.
• Five to 50 units: private mortgage insurers can insure single-title properties with five to 50 self-contained units for construction, purchase, refinance and renewal. Maximum loan to value is 90% for new construction and 85% otherwise. Maximum amortization is 50 years for new construction and 40 years otherwise, with debt coverage and net worth requirements.

The budget gives an example of a $3 million fourplex that would not qualify for insurance today because it is over the $1.5 million cap and the builder would have to live in one unit. Under the new rules, the builder could get an insured loan for up to 90% of value with neither requirement.

What else is in the budget for housing?

• $100 million over three years, starting in 2027-28, for municipal e-permitting and AI tools to speed up approvals.
• $300 million over three years, starting in 2028-29, plus $200 million in future years, to expand modern construction methods such as factory-built housing.
• An additional $13 billion over ten years, starting in 2028-29, for Build Canada Homes, bringing its total capitalization to $45 billion, with a goal of 200,000 new homes over the next decade.

What does this mean if you are buying in Toronto?

For most Canadian buyers, very little changes today. If you are putting 20% or more down on a home between $1 million and $1.5 million, and you are a first-time buyer or buying new, the optional insurance proposal could eventually give lenders more ways to price your mortgage and allow a 30-year amortization. Until it is in force, assume the current rules. If you are looking at pre-construction, watch how "new residential property" is defined, since that decides which projects could see added foreign interest.

What does it mean for sellers and owners?

Resale sellers should not expect the new-home exemption to bring foreign buyers to their door, because existing homes remain covered by the ban until January 1, 2029, and the provincial and municipal speculation taxes still apply. Owners with a lot that could fit a triplex or fourplex should note February 1, 2027. Insured financing with no owner-occupancy requirement may change the math on a build or a purchase of a new multiplex, but every project still has to pass lender underwriting and City approvals.

FAQ

Is the foreign buyer ban ending?

No. Budget 2026 proposes extending it to January 1, 2029, for existing homes. Only new residential properties would be exempt, once legislation and regulations are in place.

Can foreign buyers purchase a new Toronto condo today?

The exemption is a proposal and is not yet in force, so the current ban and its exceptions still apply. Even after it takes effect, Ontario's 25% NRST and Toronto's 10% MNRST would still apply to foreign buyers.

When does the $1.5 million optional mortgage insurance change start?

The budget does not give a date. Ask your lender or mortgage broker before relying on it.

When do the triplex, fourplex and 5 to 50 unit insurance rules start?

For mortgage insurance applications lenders submit on or after February 1, 2027.

Thinking about your next move?

If you would like to talk through how these changes could affect a purchase, a sale or a multiplex idea in Toronto, you can connect with The Starke Group here.