New to Canada? We welcome you with open arms! If purchasing a home is on the top of your list for life in this country, it will be important to learn what is involved and how you can borrow money for your new home in Canada. Let us help you familiarize yourself with the qualifying process for a Canadian mortgage.
To be eligible for a mortgage here in Canada, any new citizens must be employed by a Canadian employer for a minimum of three months. However, there’s an exception to the rule for those who have been transferred to Canada as part of a relocation program for work. The reason this rule exists is to ensure you pass the three-month probation period with the employer.
You will also be required to produce a credit history report. Applying for a credit card in Canada is a good way to start this process. Lenders also understand that it may be difficult for new immigrants to obtain credit cards and produce a solid credit report in their first three months. So, some will allow flexibility for the first 36 months – allowing you to provide a credit report from your previous country, a landlord letter, or paid utility bills as part of the application process to qualify for a mortgage. The amounts of financing you will be able to obtain will depend on the type of status you have here in Canada.
Landed Status and Work Visas
If you have landed status or are here on a work visa, once you have been employed for three months, and have met the credit guidelines as described above, you can qualify for up to 95% financing. In this group, you’re allowed to borrow against your primary residence like all other Canadians.
If you’re classified as a non-landed immigrant who has been employed for three months and meet the credit guidelines, you can borrow up to 90% financing. However, the lender may require that you have applied for landed status before you qualify. And you’re limited to single-unit primary residences and will be granted no refinances as part of the conditions.
Non-Landed Status and Unemployed
If you can provide a strong credit history that meets the lender’s requirements you can borrow between 65% and 75% financing. The catch is that you must show liquid assets equal to six months of mortgage principal, interest, and property taxes if you wish to borrow 65%. Otherwise you can show liquid assets equal to 25% of the purchase price to gain 75% financing. Plus, the property must be a primary residence for you to qualify.
If you are buying a home in Canada as a secondary or vacation home but are considered a Non-Resident because you live and work in another country you may still be eligible to purchase a home in Canada. US residents could qualify up to 80% while other countries are limited to 50 – 65%.
Understanding the mortgage landscape in Canada can be challenging, especially when you first arrive here as a new citizen. Don’t get stuck with inaccurate or misleading information, talk to a professional who knows the process and has the reputation for trustworthy advice. The Mortgage Advisors in Ottawa can help you get into your new home to start your new life here in Canada as soon as possible.