Are you a new immigrant to Canada? Wondering…What are the Mortgage Options for New Immigrants to Canada? Scroll down to get extensive details on Canadian mortgage eligibility, conditions, documentation, requirements and much more. Get an answer to all your queries on Newcomer Mortgage Programs in an easy and simple manner.
What is a Mortgage?
A mortgage is a type of loan that is borrowed to cover the costs of purchasing a home – be it a residential home or an investment property. Generally, banks act as the lender and they charge mortgage fees and interest for their services. The borrowers are expected to repay their loans within a specific period agreed on the time of loan application.
Who are New Immigrants?
You are an immigrant of Canada, if you have moved out of your country and into Canada with an aim to settle down in Canada permanently. An immigrant newcomer is the one who has moved in in the previous five years’ time.
Are you a new to Canada? Do grab the Financial Checklist for Newcomers to Canada.
What is a Newcomer Mortgage and who are eligible for this loan type?
A newcomer mortgage program is offered by some of the banks in Canada to aid new immigrants of Canada to purchase property. It is notable that the eligibility rules of this program are lenient than the traditional mortgage offered to a Canadian resident or citizen.
Newcomer Mortgage Eligibility Criteria
The eligibility criteria are as follows:
- You must have moved into Canada within the last five years.
- You must either be a permanent resident or a landed immigrant or have a work permit or be a refugee and Citizenship Canada (IRCC).
- You must have an employment history of a minimum of two years.
- You must have a minimum down payment
- 5% if the purchase price of the property is less than $500,000
- If purchase price is between $500,000 and $999,999 then the down payment is calculated such that 5% for first $500,000 and 10% for amount over $500,000 and below $999,999
- If the purchase price is $1 million or more, the down payment must be 20%
- Your gross debt service ratio must be 39% or lower. A gross debt service is the cost of your home divided by your gross income. For example, if your home value is $500,000 and if your gross annual income is $50,000, then your gross debt service ratio is 10% that is acceptable. The idea behind is that 39% of lower of your gross income must go towards servicing your home costs, so that there are remaining funds to meet other expenses.
- Your total debt service ratio must be 44% or lower. This is calculated by dividing your monthly household income divided by your total debts. The aim is that not more than 44% of your household income must be used for loan repayments.
Not to miss our exclusive post on Financial Literacy in Canada
What documents are required to apply for Newcomer Mortgage in Canada?
- Employment proof and Income proof from your employment and other stable sources
- Purchase deed of the home and sale deed
- Bank statement
- Credit report
- Utility bill payment records
- Reference letter from a financial institution, even if from a newcomer’s home country
Applying for a Newcomer Mortgage in Canada – Things to Do
- Determine the down payment you can make and set aside that amount
- Start building a credit history in Canada
- Research and narrow down the newcomer mortgage program you wish to opt for
- Talk to a mortgage specialist, if required
- Determine how much you can borrow and if you can fund the loan repayment
- Once done, contact a real estate age to purchase a home based on your budget.
Best Newcomer Mortgage Programs in Canada
Here we have handpicked some of the popular Newcomer Mortgage Programs in Canada:
1. RBC Mortgages for Newcomers to Canada
RBC is one of the banks that offer 120-days guaranteed and a competitive interest rate and the bank does not require credit history for a new comer mortgage application. If you apply for a loan for 80% of home value, then you can choose term of up to 30 years. RBC is well known for its quick approval and processing of loans. In addition, you can tailor your mortgage solutions by getting one on one consultation with a mortgage advisor.
2. Canadian Imperial Bank of Commerce (CIBC)
Within CIBC, the service provider offers three schemes as illustrated below:
CIBC Newcomer to Canada Program Mortgage:
You can opt for it, if you have a limited credit history but have sufficient income to repay your debt.
CIBC Newcomer to Canada PLUS Program Mortgage:
This is for you, if you who have previously lived in Canada and have returned to Canada after residing in another country, for a while. For this purpose, you do not need credit history.
CIBC Foreign Worker Program Mortgage:
You can apply for this, if you have a work permit in Canada and a credit report is not scrutinized for this type.
You may also explore How to save for Down Payment to Buy a Home in Canada?
3. Scotiabank StartRight Mortgage Program
The start right program is for temporary residents of Canada. You can choose to make repayments on a weekly, bi-weekly, semi-monthly or on a monthly basis. It offers insurance. You can choose either a variable or a fixed interest rate. Th variable mortgage rate varies from 6.150% to 9.250%, whereas, the fixed rate varies from 6.090% to 7% depending on the number of years.
4. TD Mortgages for Newcomers
This scheme does not require a credit history. You must have a TD chequing account, submit proof of residency status, proof of age, valid passport, Canadian drivers’ licence, and a government of Canada ID. You must wither bring your PR card, confirmation of PR or your temporary permit.
5. HSBC New to Canada Mortgage
In this program, you can open a bank account even before you arrive at Canada and your international credit history and reports are acceptable for this application. You can speak to mortgage specialist to tailor your loan solutions based on the real estate investment you wish to make for your dream home.
Insuring your Newcomer Mortgage in Canada
Canada Mortgage and Housing Corporation (CMHC) is a part of Canadian government. For your newcomer loan to be insured, you must be a permanent resident and must have a credit score of 600 or more. If your credit history is less then your utility bill payments will be scrutinized.
If you are not a permanent residence, then your international credit report will be analyzed and a reference letter is obtained. The home purchase price must be $1 million or lesser. You must make a down payment of at least 5% for $500,000 and 10% for the reminder value of the home.
Can you get a mortgage if you do not have a credit history in Canada?
It is hard for you to get a mortgage approved without credit history. However, it is not impossible. As explained earlier, RBC mortgage for newcomer does not require you to have a credit history in Canada, if you come under the definition of a newcomer.
Similarly, TD Mortgage for newcomers, CIBC Newcomer to Canada PLUS Program Mortgage and CIBC Foreign Worker Program Mortgage, etc. does not require you to have a credit history in Canada.
But, if you wish to opt for any other service provider, then you can consult with the bank representative, if they will accept an international credit history, alternative proof such as timely payment of utility bills, and use a co-signer for your loan.
You may also like to explore Best Credit Cards for New Immigrants to Canada.
Can I get a mortgage with a Big Bank as a newcomer in Canada?
Yes, we have listed the newcomer mortgage schemes offered by the big five banks of Canada:
- Royal bank of Canada (RBC): RBC Mortgages for Newcomers to Canada
- TD Bank: TD Mortgages for Newcomers
- Bank of Nova Scotia: Scotiabank StartRight Mortgage Program
- Bank of Montreal: None
- Canadian Imperial Bank of Commerce: CIBC Newcomer to Canada Program Mortgage, CIBC Newcomer to Canada PLUS Program Mortgage and CIBC Foreign Worker Program Mortgage
Do you wish to open a new bank account? Don’t forget to get information on the Best Banks for New Immigrants in Canada.
Can I get a Mortgage without an employment history in Canada?
It is advisable that you have a minimum two years of Canadian employment history to get a mortgage. However, it is not completely impossible to get a mortgage approved in Canada without or limited employment history.
For example, if you apply with RBC, all they need is for you to come under the definition of a newcomer, be a permanent resident, have 3 months of employment history and have a valid letter of reference from your home bank.
You may also contact other service provider and enquire if they will accept a co-signer, larger downs payments, other sources of reliable income, record of your other assets, and proof of other funds
The Bottom Line
You can even purchase a home even before arriving at Canada through virtual home tours and e-signature. As a newcomer you can also qualify for a first-home buyer, given you are eligible. After all these steps, if you are still not able to get a mortgage as a newcomer through a bank, you can choose a private mortgage lender.
There might be various other mortgage programs for newcomers to Canada. We have listed the trending ones. Being an immigrant you can face a lot of challenges at your new destination. However, the financial institutions keep offering a range of Newcomer benefits like Mortgage Programs, bank accounts and credit cards with numerous benefits. So, stay tuned to catch up with interesting offers!
If you have any question on New Immigrant Mortgage, you can comment below. Or simply Ask a Query for FREE on FINTRAKK Canadian Personal Finance FAQ Portal and find quick answers and discuss important financial topics.