We often receive calls from people who have moved to Canada from another country within the last couple of years asking what kind of mortgage options are available to them. In this article we will explore what kind of requirements you must meet to qualify for a mortgage if you are new to Canada.
I would say the biggest difference between qualifying as a newcomer to Canada instead of as a Canadian citizen is there are less credit requirements to meet under the new to Canada programs.
Along with the reduced Canadian credit requirements, do be aware the mortgage options available will differ depending on your current citizenship status within Canada. It is also important to mention at this time that if you are interested in purchasing a home with less than 20% downpayment, the mortgage has to be insured by one of the 3 different insurers currently available in Canada. Having said that, not all lenders have access to all 3 insurers and if you don’t fit into your own banks guidelines under their New to Canada program, you may want to speak with a mortgage broker. Given brokers work with many banks and lenders, they do have access to all 3 insurers who all seem to have different rules and guidelines for people who are new to Canada and you may just meet the requirements with a different lender.
A Valid Work Permit
This means you have an employer that has sponsored you to live and work within Canada for a set amount of time. It doesn’t matter when you arrived in Canada, as long as you have been here less than 5 years you have mortgage options within New to Canada products. You can qualify for a mortgage with a minimum 5% downpayment as long as you meet the other credit requirements. Keep in mind your 5% downpayment must come from your own savings and cannot be a gift or borrowed.
Landed Immigrant Status
If you have been recognized by Canada as a landed immigrant, then you have to meet the same requirements as a borrower with a valid work permit. As long as you have been in Canada less than 5 years and meet the minimum credit requirements, you can buy a home with as little as 5% downpayment from your own resources.
When you are officially a permanent resident of Canada, you have a few more mortgage choices available to you than before. You can still get a mortgage with a minimum 5% downpayment, however, it now doesn’t necessarily need to be from your own savings. You can borrow your downpayment or have it gifted to you from a related family member. Do be aware if you have been in Canada longer than 5 years or have more than 2 years of Canadian debts reporting on your credit report you may not qualify under the New to Canada program.
When you are trying to qualify for a mortgage and you are new to Canada, there are a couple of specific requirements regardless of what your status within Canada is. Depending on your downpayment amount and what kind of Canadian credit you do have, your mortgage lender is going to request alternative credit confirmation. Alternative credit is bills you pay in a timely and on a regular basis that do not go onto your Canadian credit report. For instance, this can include a foreign credit report, a letter from your landlord, utility bills or cell phone bills. Be sure to tell your mortgage professional about any other property you own outside of Canada as they have to include those debts in your application when you’re qualifying for a new mortgage.
I hope you have found this post helpful and I want to point out that every borrower’s situation is different and your mortgage options could vary greatly depending on your circumstances and the type of mortgage you are requesting. Talk to an experienced mortgage professional about your custom mortgage solution and all the details & documents involved in qualifying for a mortgage in Canada.
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