What is a New to Canada Mortgage?
For Canadians, securing a mortgage can be quite difficult as there are very strict protocols put in place by the government. There are specific credit and income requirements that must be verified, especially when the borrower has less than a 20% down payment.
These requirements make it especially difficult for newcomers to Canada to secure a mortgage. Without established credit in Canada, a lender may not view an applicant as an acceptable borrower, even if they had great credit and excellent employment history in their previous country.
Fortunately, there are specific lenders who have special programs in place for newcomers to Canada who wish to purchase a home but are unable to provide a Canadian credit report or more than a 20% down payment. While program requirements vary, some lenders will allow as little as 5% down.
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Mortgages for Newcomers to Canada
Even if you are considered a newcomer to Canada (been in the country less than five years), if you are a permanent resident and have good, established credit, you can likely qualify for a regular mortgage like all other Canadians. But if you don’t meet the qualifications for a regular mortgage, you can apply for a new to Canada mortgage with Canada Mortgage and Housing Corporation (CMHC), Genworth Financial or Canada Guaranty, which have more of a flexible application process.
Newcomers to Canada who wish to purchase a home generally fall into the following three categories:
Permanent residents who are employed
If you have been working in Canada for at least three months, you may be able to qualify for a mortgage with as little as 5% down as long as you can prove strong international credit. If you are unable to provide a credit report, some lenders will allow you to provide alternative proof. An alternative proof of credit would include 12 months’ worth of paid bills, like cable or hydro.
Non-permanent residents who are employed
If you do not have permanent residency status but have been working for at least three months and can meet the same credit requirements as above, you may be eligible to secure a mortgage with 10% down. If you fall into this category, you may only purchase an owner occupied home, and the lender may request proof that you’ve applied for permanent residency.
New immigrants who have applied for permanent status, but are not working.
If you are not yet a permanent resident and are also not working, you’ll likely need to be able to provide a 25-35% down payment. In addition, you’ll need to prove that you have enough liquid assets to cover 6 months of mortgage payments, or 25% of the home’s purchase price. Because you are not working, the lender will need reassurance that you’ll be able to cover your mortgage payments.
Why Should New Immigrants to Canada Work with a Mortgage Broker?
Moving to a new country is exciting, but purchasing a home and securing a mortgage can be very stressful. For newcomers to Canada, working with a Mortgage Broker lifts a majority of that weight completely off your shoulders.
A Vancouver Mortgage Broker will be able to review your specific situation and guide you through the entire process, connecting you with a lender who is most likely approve your mortgage. If you won’t be able to qualify for a standard mortgage product, our experienced mortgage brokers can connect you with a lender who has a New to Canada Mortgage Program that will fit your unique situation. Working with a mortgage broker is the best way to get a new to Canada mortgage approved quickly and easily.
New Immigrant Mortgage Program Requirements
As a new immigrant, if you don’t qualify for a regular mortgage, the programs offered by the three Canadian mortgage default insurers Canada Mortgage and Housing Corporation (CMHC), Genworth Financial or Canada Guaranty are for you.
The requirements for New to Canada Mortgage Programs will vary by lender, but generally have the following requirements:
Property requirements for a New to Canada Mortgage
The property must cost less than $1 000 000.
Employment Requirements for a New Immigrant Mortgage
Applicant must have been working full time in Canada for the past 3 months, and be able to prove income and employment information.
Credit Requirements for Newcomers to Canada
A credit report of 90.01-95%, or 2 alternative source of credit. Alternative sources of credit include 12 months’ worth of rental payment history, and one other bill, like a cell phone bill.
If the credit report is less than 90% a reference letter from a recognized financial institution is required, or 6 months of bank statements from the applicant’s main account.
Down Payment Requirements for Newcomers to Canada
If the property in question costs less than $500,000, the applicant must provide a 5% down payment. For properties that cost over $500,000, the applicant must put down 5% on the first $500,000, and 10% on anything over that amount. At least 5% of the down payment must come from the applicant’s own resources.
Non Resident Mortgages in Canada
If you’re from out of country and would like to purchase a home in Canada as a vacation home, or investment property, there are many lenders who will offer you a mortgage. If you’re not a resident of Canada (and don’t plan on becoming one) you can qualify for a Canadian mortgage upon meeting the following requirements:
· Proof of acceptable credit
· Have your bank provide a recommendation letter
· Employment letter to verify job and income
· Verified assets
· Property must be appraised and meet standards for rental or vacation properties
Assuming you meet the criteria above, as a non-resident buying property in Canada, you will have access to the same interest rates that Canadian citizens have. It is important to note however, that a non-resident buying property in Canada will be subject to a 35% down payment that is not gifted.