Mortgage Solutions for Newcomers to Canada
Your Guide to Securing a Mortgage as a Newcomer to Canada
For many Canadian citizens, applying for a mortgage can be relatively straightforward. However, if you have recently moved to Canada and are not yet a citizen, you can still qualify for a mortgage. The process, however, involves additional documentation and eligibility criteria.
Building a strong credit history is crucial for securing a mortgage, especially for newcomers. If you have little or no Canadian credit history, alternative credit documentation, such as rent payments, utility bills, or an international credit report, may be considered by lenders.
Canada also offers several mortgage programs specifically designed for newcomers to help non-permanent and permanent residents secure financing.
Factors Determining Mortgage Qualification for Newcomers
Permanent Residency Status
Permanent residents generally qualify for the same mortgage products as Canadian citizens, while non-permanent residents may face additional requirements.
Size of Your Down Payment
A larger down payment can improve mortgage approval chances. Typically, a 5% down payment is required for insured mortgages, but non-permanent residents may need at least 10% down.
Credit Score & History
A strong credit rating helps secure better mortgage terms. Newcomers should consider credit cards, responsible borrowing, and timely payments to build their credit profile.
If you do not have a Canadian credit history, lenders may accept alternative credit documentation, such as a history of on-time rent payments, utility bill payments, and an international credit report from your home country.
Scenarios for Newcomers Applying for Mortgages
Permanent Resident with Good Credit and 5% Down Payment
Best-case scenario, you qualify for a regular mortgage, just like any Canadian citizen.
Permanent Resident with 5% Down Payment but Weak Credit
You may qualify for the CMHC New to Canada Program or similar options from Canada Guaranty and Sagen (formerly Genworth Financial).
Non-Permanent Resident with Good Credit, Work Permit, and 5% Down Payment
You may qualify for a regular mortgage, depending on the lender's requirements.
Non-Permanent Resident with No Canadian Credit History
You may need a larger down payment (typically 10%), and lenders may require alternative credit documentation, such as rental payment history or an international credit report.
Newcomer Without a Work Permit or Permanent Status
Mortgage eligibility depends on the lender. You may need a larger down payment, and approval may require private lenders or tailored newcomer mortgage programs.
Mortgage Default Insurance for Newcomers
If your down payment is less than 20%, you may need mortgage default insurance, which protects lenders against potential defaults. The main providers in Canada are CMHC, Sagen, and Canada Guaranty. Each provider offers tailored options for newcomers. Use a mortgage default insurance calculator to estimate costs based on your down payment and loan amount.
Additional Support for Newcomer Home Buyers
Newcomers may also benefit from first-time home buyer incentives, such as:
- First Home Savings Account (FHSA): A tax-free way to save for a down payment.
- First-Time Home Buyers' Tax Credit: Provides a rebate on eligible home purchase costs.
- Home Buyers' Plan (HBP): Allows you to withdraw up to $35,000 from your RRSP to buy your first home.
Next Steps: Securing Your Mortgage as a Newcomer
Buying a home as a newcomer to Canada is possible with the right preparation. To improve your chances of mortgage approval:
- Start building credit history with a secured credit card or responsible borrowing.
- Consider newcomer mortgage programs.
- Work with a mortgage broker who understands the unique challenges newcomers face.
At Tordon Mortgages, we specialize in helping newcomers navigate the mortgage process with confidence. Contact us today to explore your best mortgage options and start your journey toward homeownership in Canada!