Canada is always welcoming people from around the world. I understand that starting a new life in Canada comes with various challenges, and one significant aspect is navigating the process of becoming a homeowner. I want to provide information about mortgages tailored to new immigrants.
If you have become a Permanent Resident or have received confirmation of Permanent Resident Status, you can qualify for a standard mortgage with a 5% down payment, assuming you have a good credit history.
There are still options for Permanent Residents with limited credit or those who still need to obtain Permanent Residency but have a valid work visa with 183 days or more of validity remaining or work authorization on the date of purchase. Canada has special mortgage programs designed for newcomers, which CMHC, Sagen, and Canada Guaranty Mortgage Insurance offer.
To be eligible for these “New to Canada” programs, you must have immigrated or relocated to Canada within the last 60 months and have at least three months of full-time employment in Canada. For those seeking credit of 90.01-95%, you must provide an international credit report (Equifax or Transunion) demonstrating a good credit profile OR two alternative sources of credit with timely payments (no arrears) over the past 12 months. These alternative sources could include rental payment history and another form of credit, such as hydro/utilities, cable, cell phone, or auto insurance. Individuals looking for 90% financing will need a letter of reference from a recognized financial institution OR six (6) months of bank statements from a primary account.
Working with a mortgage broker can be incredibly helpful in understanding your options and finding the best program and mortgage for your situation. Before reaching out to a mortgage broker, here are some important things to know when applying for your first mortgage in Canada:
Supporting Documents
Having supporting documents is needed if you’re new to Canada and have a limited credit history. These may include proof of income, 12 months’ worth of rental payments or a letter from your landlord, documented savings, bank statements, and/or a letter of reference from a recognized financial institution.
Build Your Credit Rating
Building a good credit rating is important for mortgage approval. It reflects your reliability as a borrower and determines your required down payment. Obtaining and responsibly using a credit card, paying bills like utilities, cell phones, and rent on time, contribute positively to your credit score.
Start Saving
Depending on your status, the down payment can be 5% or 10%. If your home purchase exceeds $500,000, the minimum down payment will be 5% for the first $500,000 and 10% for any amount over $500,000, regardless of residency status.
Choose a Mortgage Provider
When ready to secure your mortgage, decide where to borrow from. Options include Banks, Credit Unions, and Monolines. Alternatively, working with a mortgage broker may offer additional lenders.
Buying a house is an exciting journey, especially for those new to Canada. With some knowledge and preparation, becoming a homeowner in this great country is entirely achievable.
