New to Canada
Buying a house is an exciting step for anyone, but it is especially so for individuals who are new to the country.
As daunting as it may seem, purchasing a home is completely possible with a little knowledge and preparation.
If you are already a Permanent Resident or have received confirmation of Permanent Resident Status, you are eligible for a typical mortgage with a 5% down payment – assuming you have good credit.
Some additional criteria for qualifying includes:
- Must have immigrated or relocated to Canada within the last 60 months
- Must have a valid work permit or obtained permanent residency
- All debts held outside of the country must be included in the Total Debt Servicing Ratio (GDS/TDS)
- Rental income earned outside of Canada is excluded from the GDS/TDS calculation
- Guarantors are not permitted
- Owner-occupied properties if putting less than 20% down payment
Limited credit or not yet permanent resident
For Permanent Residents with limited credit, or individuals who have not yet qualified for Permanent Residency, there are still options! In fact, there are several ‘New to Canada’ mortgage programs through CMHC, Sagen™ and Canada Guaranty Mortgage Insurance, which cater to this group of homebuyers.
To qualify for these New to Canada programs, you must have immigrated or relocated to Canada within the last 60 months and have had three months minimum full-time employment in Canada.
Another option for New to Canada residents, depending on your residency status and credit history, are alternative lenders such as B-Lenders and MICs (Mortgage Investment Corporation). It is important to note that alternative lenders will require a down payment of 20%.
Alternative lenders cater to individuals which lack a strong credit history, or a guaranteed income (recent immigrants, or the self-employed, for instance). As a result, these lenders generally have lower entry qualifications, which are offset by higher interest rates.
If you do not qualify for the New to Canada programs, or a standard mortgage, reach out to a Mortgage Centre Specialist to find out your options!
Preparing for your first mortgage in Canada
Using a mortgage specialist will help to ensure you understand your options and they can help you determine the best program and mortgage choice for you. Here are a few things you can do to help get the process started!
- Organize Your Supporting Documents. If you’re new to the country and have weak credit, supporting documents will come in handy. These may include: proof of income, proof of 12 months’ worth of rental payments or letter from landlord, documented savings, bank statements and/or letter of reference from a recognized financial institution.
- Build your Credit Rating. This is one of the most important aspects to getting a mortgage as credit rating determines your reliability as a borrower and will determine your down payment rate. One of the best ways to build your credit is by getting a credit card that you use and pay off each month. Paying other bills such as utilities, cell phones and rent can also contribute to your credit score and reliability.
- Save for Your Down Payment. One of the most expensive aspects of home ownership is the down payment, which is an upfront cost and one that is vital to securing your future. As mentioned, the down payment can be as little as 5% to 10% depending on your status. However, if you’re paying $500,000 or more for your home, the minimum down payment will be 5% for the first $500,000 and 10% of any amount over $500,000 – regardless of your residency status.
- Choose a Mortgage Provider. Once you are ready to get your mortgage, it is best to contact your Mortgage Centre Specialist who can help you determine the best mortgage solution to suit your needs. They may even be able to find you some extra savings!