Mortgage for Newcomers and Immigrants in Canada

RefinancePro.club

Getting a Mortgage as a Newcomer or Immigrant in Canada

Buying a home is often one of the first major financial goals for newcomers to Canada. Recognizing this reality, the majority of Canadian financial institutions have developed mortgage programs specially tailored to permanent residents and work permit holders. These programs account for the unique challenges immigrants face, including the absence of Canadian credit history, the need to transfer international funds, and financial documentation from abroad.

Mortgage Programs for Newcomers

Major Canadian banks (Desjardins, RBC, TD, BMO, Scotiabank, CIBC, National Bank) all offer programs for newcomers, with conditions that vary from one lender to another. Most of these programs are accessible to permanent residents who have arrived in Canada within the last five years. Some lenders extend eligibility to valid work permit holders. Common features of these programs include acceptance of international credit references in lieu of Canadian credit history, down payments as low as 5%, and access to the lender's preferred rates.

Required Documentation

Proof of immigration status: permanent resident card, confirmation of permanent residence (IMM 5292), or valid work permit.
Canadian employment letter: confirming position, salary, start date, and employment status (full-time, permanent). If employment has not yet begun, a firm offer letter may be accepted.
Bank statements: Canadian accounts for the last 90 days and foreign accounts for the last 6 to 12 months to prove financial history and source of funds.
International credit references: credit report from country of origin, proof of rent payments, foreign loan or credit card statements.
Proof of down payment: complete documentation showing the origin of funds, the transfer path to Canada, and the balance in a Canadian bank account.
Identification documents: valid passport and, if applicable, Canadian Social Insurance Number (SIN).

Recommended Steps for Newcomers

Open a Canadian bank account upon arrival: Quickly establish a banking relationship in Canada. Deposit your funds into a Canadian account and begin building a transaction history. Several banks offer special banking packages for newcomers.
Obtain a credit card and build your credit: Apply for a secured or regular credit card as soon as possible. Use it regularly for small purchases and pay the balance in full each month. A credit history of 6 to 12 months will significantly improve your mortgage options.
Gather international documentation: Prepare your international credit references, foreign bank statements, and any relevant financial documents from your country of origin. Have documents not written in French or English translated by a certified translator.
Consult an AMF-certified mortgage broker: A broker specializing in newcomer files knows the programs of each lender and can direct you to the option best suited to your situation. The service is free for the borrower.

Government Programs Accessible to Newcomers

Permanent residents who meet first-time buyer criteria have access to the same government incentives as Canadian citizens, including the Home Buyers' Plan (HBP) to withdraw up to $60,000 from an RRSP, the First Home Savings Account (FHSA), and the First-Time Home Buyers' Tax Credit (HBTC). However, the HBP requires that funds be in an RRSP for at least 90 days before withdrawal, which requires advance planning. The FHSA also requires a contribution period. It is therefore advantageous to begin contributing upon arrival in Canada if homeownership is part of your plans.

Frequently Asked Questions

Can a newcomer without Canadian credit history get a mortgage?

Yes. Most major Canadian banks offer special programs for newcomers who do not yet have a credit history in Canada. These programs accept international credit references, proof of rent or bill payments in the country of origin, or reference letters from foreign banks. Eligibility generally depends on immigration status (permanent resident or work permit holder).

What is the minimum down payment required for a newcomer?

Newcomer programs generally offer the same down payment conditions as for established Canadian buyers: 5% for properties at $500,000 or less, and 10% on the portion between $500,000 and $999,999. Some programs may require 10% down payment if the newcomer has been in Canada for less than 3 months or does not yet have confirmed employment.

Can a work permit holder buy property in Canada?

Yes, holders of a valid work permit can buy property and obtain a mortgage in Canada. Conditions vary by lender: some require a work permit with a minimum remaining duration, a Canadian employment letter, and sometimes a higher down payment than for permanent residents. The work permit must be valid for the foreseeable duration of the mortgage term or the lender must have confidence in the renewal of the status.

Are funds from abroad accepted for the down payment?

Yes, foreign funds are accepted, but the lender will require thorough documentation to meet the requirements of Canadian anti-money laundering law (FINTRAC). You will need to provide foreign bank statements showing the history of the funds, proof of the transfer to a Canadian bank account, and potentially an explanation of the source of funds (savings, property sale, documented family gift).

Does a newcomer have access to the HBP and FHSA?

Yes, permanent residents and tax residents of Canada have access to the HBP and FHSA, provided they meet the first-time buyer criteria. However, the HBP requires RRSP contributions made at least 90 days before the withdrawal, and the FHSA requires a contribution period before withdrawal. Planning savings from the time of arrival in Canada is therefore recommended.

Is a mortgage broker useful for a newcomer?

Absolutely. An AMF-certified mortgage broker knows the specific programs of each lender for newcomers and can compare conditions, rates, and eligibility criteria. The broker can also help navigate the documentary requirements, which can be complex when foreign documents need to be translated or authenticated. The broker's service is generally free for the borrower, as the broker is compensated by the lender.