How to Qualify for a Mortgage, New to Canada
Here’s where things get interesting for anyone who has recently immigrated to Canada. You could qualify for a mortgage to purchase your first home in as little as three months after moving to Canada. If you have been living in Canada for more than 3 months and less than 5 years, you could qualify for a mortgage here. If you have been relocated to Canada by your
employer, you do not need to wait for 3 months. Note that if you have lived in Canada for more than 5 years, you will usually need to qualify using the same rules as other Canadians who have been living here for a long time.
Note that your mortgage broker will need to understand all your debts inside and outside Canada
Criteria:
Income Criteria
You’ll need to have a minimum of three months of full-time employment here in Canada (unless you were relocated by your employer). If your employer pays you a salary, or if you get paid by the hour and your hours are guaranteed each week, then your income could be eligible to qualify you for a mortgage. You cannot be on probation with your employer when you apply.
Homebuyers can qualify with a valid work permit or permanent residency here in Canada. You do not need to be a Canadian citizen to get approved for a mortgage here in Canada.
You’ll need to have a minimum of three months of full-time employment here in Canada (unless you were relocated by your employer). If your employer pays you a salary, or if you get paid by the hour and your hours are guaranteed each week, then your income could be eligible to qualify you for a mortgage. You cannot be on probation with your employer when you apply.
Homebuyers can qualify with a valid work permit or permanent residency here in Canada. You do not need to be a Canadian citizen to get approved for a mortgage here in Canada.
If you are self-employed, you are not eligible for most New to Canada mortgage programs. However, you may still be able to purchase a home as long as you have more than a 20% down payment and a two-year history of filing income taxes in Canada.
Down Payment Criteria
You can get a mortgage to purchase a home in Canada with as little as a 5% down payment. If the purchase price of your home is $500,000 or less, then you only need a minimum of 5% down payment. If you are purchasing a home that costs between $500,001 and $999,999, you need to have at least 5% of the first $500k plus 10% of the purchase price above $500k as your down payment.
You can get a mortgage to purchase a home in Canada with as little as a 5% down payment. If the purchase price of your home is $500,000 or less, then you only need a minimum of 5% down payment. If you are purchasing a home that costs between $500,001 and $999,999, you need to have at least 5% of the first $500k plus 10% of the purchase price above $500k as your down payment.
Example A: if you purchase a home for $450,000, then you need at least $22,500 for a down payment
Example B: if you purchase a home for $900,000, then you need at least $65,000 for a down payment
Example: If you purchase a home for $900,000 and decide to put down $65,000, then the first $25,000 must be from your own resources (no gift or subsidy). The other $40,000 can be from a family gift or subsidy.
You can use a down payment of any amount larger than 5% as long as you follow the guidelines above.
Some lenders require 35% down payment
Credit History
For many newcomers to Canada, there is not much credit history yet. This means that your credit profile needs more information to help lenders decide if you are likely to repay the mortgage on time. A lack of credit history can make getting approved for most mortgages difficult. In a newcomer mortgage, you could still get approved to purchase a house even if you don’t have a long credit history.
For many newcomers to Canada, there is not much credit history yet. This means that your credit profile needs more information to help lenders decide if you are likely to repay the mortgage on time. A lack of credit history can make getting approved for most mortgages difficult. In a newcomer mortgage, you could still get approved to purchase a house even if you don’t have a long credit history.
If your down payment is at least 5% but less than 10%, then you could get approved using either of these two sources of credit history. You need to have at least one of these.
1. An international credit report from Equifax or Transunion which shows that you have a strong credit profile. OR
2. Two alternative pieces of information that will show the mortgage lender that you are likely to repay the mortgage on time.
Examples of an alternative could be 12 months of rent payment history with 12 months of utility payment history or auto insurance history. This information must come from institutions in Canada
Documents Required
Everyone applying for a mortgage in Canada needs to provide their mortgage broker with some documentation so they can review your application and approve your mortgage.
Everyone applying for a mortgage in Canada needs to provide their mortgage broker with some documentation so they can review your application and approve your mortgage.
If you’re applying for a mortgage as a New to Canada, here is a list of the most common documents that you’ll need:
* Government-issued photo ID
* Valid work permit or proof of permanent residency
* Bank statements to document your down payment
* Letter of employment from your employer and a recent pay stub
* Copies of utility bills or other documents to support your credit history as outlined above, unless you have enough information in your Canadian credit profile
* Your mortgage broker might ask for some additional documents if needed to assist your application
* Letter of employment from your employer and a recent pay stub
* Copies of utility bills or other documents to support your credit history as outlined above, unless you have enough information in your Canadian credit profile
* Your mortgage broker might ask for some additional documents if needed to assist your application
Photo courtesy of Mart Production
