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Mortgages For Newcomers to Canada
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Immigrating to a new country is no easy feat. On top of the stress of adjusting to a new culture and way of life, immigrants face countless financial hardships. Starting over requires them to sort out a new bank account, build credit from scratch, and find income and housing. Remittances, or money sent back to family in an immigrant’s home country, also poses a financial burden.
One of the hardest financial issues that immigrants face is that you cannot transfer a credit report and rating from one country to another. You have to build it from zero. This makes it difficult to qualify for credit products such as unsecured credit cards, lines of credit, business loans, and of course, mortgages.
Moving to Canada? Here are some documents and services for newcomers.
What Type of Newcomers Can Get a Mortgage in Canada?
Newcomers are people who have immigrated to Canada in the last 5 years with Permanent residency status or with confirmation of Permanent Residence from Immigration, Refugees and Citizenship Canada (IRCC).
Only newcomers with permanent resident (PR) status in Canada can get a mortgage. If you are a non-permanent residence, you must have a work permit that legally allows you to work in Canada.
Mortgages Programs For Newcomers to Canada
Luckily, there are a few mortgage programs offered by various lenders that cater to newcomers to Canada. Each program has different rates, term lengths, eligibility and benefits.
RBC Mortgage for Newcomers to Canada Program
RBC has different options for newcomers depending on their employment history and ability to save for a down payment.
For newcomers with a 20% down payment and two years of employment history, RBC might qualify you for a conventional mortgage. If you aren’t able to save up 20% for your down payment, you will need to insure your mortgage. This can cost a couple of hundred dollars every month on top of your principal mortgage payments and interest.
For newcomers with a down payment, but without two years employment history, the down payment requirement is much higher. Without 2 years of employment history, newcomers will need to have a down payment of at least 35%, along with a letter of reference from a bank in your home country, and other criteria.
There are many benefits to RBC’s program, such as:
- No credit history required in Canada
- Quick approvals
- Competitive rates
- 30-year amortization periods
- One-on-one consulting with a mortgage specialist
Scotiabank StartRight® Mortgage Program for Permanent Residents
Scotiabank’s StartRight Mortgage Program is meant for newcomers that have been permanent residents for 3 years or more. Scotia Bank offers:
- Conventional and insured financing
- Scotia Mortgage Protection
- Wide range of fixed and variable mortgage rate options
CIBC Newcomer to Canada Program Mortgage
CIBC has three programs for mortgages for newcomers:
CIBC Newcomer to Canada Program Mortgage
This program is for newcomers with limited credit histories that have enough income to afford their mortgage payments.
CIBC Newcomer to Canada PLUS Program Mortgage
This program is for newcomers to Canada permanently living in Canada or Canadian citizens that were living abroad and are now permanently living in Canada. Applicants don’t need Canadian credit history to apply.
CIBC Foreign Worker Program Mortgage
This mortgage program is specific to newcomers with a valid work permit, even if they don’t have permanent residence or Canadian credit history.
For more information about CIBC’s newcomer mortgage programs, check out their website.
How Much of a Down Payment Do You Need to Have as a Newcomer?
The amount of money you need to save for a down payment as a newcomer depends on your permanent resident status:
Permanent Residents require a downpayment of at least 5%.
Non-Permanent Residents require a downpayment of at least 15%. This includes 5% on the first $500,000 with an additional 10% on the remaining amount.
For both permanent and non-permanent residents, homes with a purchase price of over $500,000 always require at least a 10% down payment.
Find out if you need to purchase CMHC mortgage default insurance.
What Documents do You Need to Apply For a Mortgage in Canada as a Newcomer?
The application requirements for a newcomer getting a mortgage is often more comprehensive than for a Canadian citizen. Without a banking history, employment history, and credit history in Canada, lenders usually require a lot of information and documentation from newcomers applying for mortgages. Here are some of the common documents requested by lenders:
- Permanent Resident Status, Landed Immigrant Status, or a valid work permit
- Proof of income
- Record of down payment
- Purchase and Sale agreement
- Employment history of at least three months
- Proof of rental payments and a letter from the landlord
- Records of payments to service providers, such as cell phone plans and utilities
- Reference letter from a financial institution, even if from a newcomer’s home country
- Months of bank statements
- Savings documentation
- International credit report
Can I get a mortgage without an employment history in Canada?
- Immigrate within the last 5 years
- Permanent Resident Status
- 3 months employment history in Canada
- Letter of reference from a bank in your home country
Can I get a mortgage if I don’t have a credit history in Canada?
- Landing papers (Work permit or visa)
- Canadian PR card
Can I get a mortgage with a big bank as a newcomer in Canada?
Newcomers face challenges while immigrating and adjusting to a new life that Canadian citizens could not imagine. Despite the financial challenges of living in a new country, Canada has many banks and financial institutions with mortgage programs that cater to newcomers’ circumstances. With a couple of years of building credit and employment history, and with the support of some specialized programs, newcomers can attain mortgages and become homeowners.
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