For new immigrants, buying a house in Canada can be an intimidating experience. This is why we’ve compiled a comprehensive guide to everything you need to know before applying for a mortgage as a newcomer to Canada. Start preparing today!
What is a New to Canada Mortgage?
A New to Canada mortgage program is designed to help newcomers to Canada who don’t meet the standard eligibility requirements for a regular mortgage.
For regular mortgages, banks often require that borrowers have two years of full employment in Canada and unblemished credit ratings before they can be approved for a standard mortgage, and these requirements are fairly strict.
The challenges for newcomer borrowers are:
- A lack of employment history
- A lack of credit history.
Newcomer mortgages are available to help those who need more Canadian experience and credit history to qualify under standard guidelines.
Who is Eligible for a New To Canada Mortgage?
- Permanent resident: Must have immigrated to Canada within the last five years.
- A non-permanent resident: legally authorized to work in Canada. Must have a valid work permit and be in Canada for less than five years.
Mortgage eligibility requirements for new to Canada program (insured mortgage)
If you have been in Canada for under five years and don’t have two years of Canadian employment and/or a good enough score for a loan, you might still qualify for a New to Canada Mortgage.
Here are some general guidelines and tips to qualify for a Canadian Newcomer Mortgage. This information is helpful for those new to Canada or planning to move to Canada soon.
Employment history in Canada
Must have at least three months of Canadian employment, no probation, full-time, with salary or guaranteed hours, no probation.
Credit history in Canada
Fortunately, options are available for those with no credit history in the country. Potential lenders may request an international credit report or references from the borrower or credit cards/bank statements from the country of origin demonstrating evidence of loan/mortgage repayment history before deciding whether to grant them a loan.
It is essential for potential borrowers without a Canadian credit history to make sure that all the financial documents provided are up-to-date and accurate to prove their experience and financial background to lenders so as not to be disqualified due to a lack of credentials.
For those unfamiliar with international transactions and documents, it’s best to work with an experienced professional who can ensure everything needed is submitted correctly and thoroughly when applying for financing without Canadian credit. This will help alleviate much of the stress associated with trying to get approved without having established local records or information from other sources. Taking such necessary precautions will allow new Canadians a greater opportunity to finance their dream home, despite possible setbacks from lacking local records.
An established credit history shows you’ve consistently been responsible with your finances. Learn tips on to work to build up your credit history here.
Maximum Purchase Price
The maximum price of the property is $999,999. Most of the New to Canada product is insured/insurable mortgage. Which means the purchase price has to be under $1 million.
If you are new to Canada and want to purchase a property over $1,000,000, you can still get a mortgage from a few of our lenders with a minimum down payment of 20%. Please get in touch with us.
Down Payment
The minimum down payment required is 5% of the purchase price up to $500,000 and 10% for the rest.
For a non-permanent resident, the lenders require a 10% down payment.
A minimum of 5% must be from the borrower’s own resources, and the rest of the down payment may be gifted from an immediate family member.
Tips for new to Canada Mortgage
- Start building your Canadian credit history as quickly as possible. The length of your credit history is a factor that influences your score positively. Some newcomer programs offer credit cards to assist new arrivals in establishing their credit history quickly. Maintaining a positive credit history through responsible usage and timely payments can facilitate obtaining a mortgage in the future.
- Keep records and organize your payment records, including hydro/utilities, phone, cable, auto insurance and rent payments. If you don’t have a credit history in Canada, you must prove your creditworthiness to the potential lender by showing timely payment records.
A mortgage professional can assist you in determining whether you are eligible for New to Canada mortgage options.
Call us @ 604.537.5353 when you need help choosing between different mortgage products for Canadians who want to buy a new house.
