Mortgage Options for Newcomers to Canada
Newcomers to Canada can get a mortgage even without an established Canadian credit history. Many banks and lenders offer newcomer mortgage programs that allow permanent residents and some temporary residents to qualify with alternative documentation and down payments starting at 5%.
Traditional mortgage approvals often rely on Canadian credit history, which many new immigrants have not yet had time to build. To address this challenge, lenders across Canada offer programs designed specifically for newcomers that consider international credit history, employment income, and available savings.
Understanding how these programs work and which lenders offer them can help newcomers plan their path to homeownership in Canada.
Key Takeaways
- New to Canada mortgage programs are available to permanent residents who arrived within the past 5 years and non-permanent residents with a valid work permit.
- Many lenders offer mortgage options for newcomers through Canada’s 3 mortgage default insurers.
- Newcomers must meet the eligibility requirements of the lenders and insurers to obtain mortgage financing.
Who Is Considered a Newcomer to Canada?
You are considered a newcomer if you immigrated to Canada within the last 5 years and have either obtained permanent residency status or confirmation of permanent residence from Immigration, Refugees and Citizenship Canada (IRCC).
Permanent residents can generally qualify for a mortgage in Canada, and some lenders may also approve temporary residents depending on their work permit and income stability.
Who Is Eligible for a Newcomer Mortgage in Canada?
Like any other mortgage, securing a newcomer mortgage in Canada requires meeting certain eligibility requirements, including your immigration status.
If you’re considered a newcomer to Canada, you can get a mortgage for a primary residence if you meet the following:
- You must have permanent resident (PR) status
- A SIN number that does not start with 9
- Have an admissible income, meaning you have a full-time employment history in Canada
- You must have immigrated to Canada within the last five (5) years
- You must have an international credit report if you still need to establish credit in Canada, alongside 12 months of bill payments (utilities, insurance, etc.) and rental history in your name.
To qualify as a temporary or non-permanent resident, you must have a work permit that legally allows you to work in Canada and a SIN number starting with 9 before qualifying for a mortgage. International students with a study permit are only eligible if they have a valid work permit and Canadian income.
Mortgage Documentation Requirements for New Immigrants in Canada
The documentation required to get a Canada newcomer mortgage will depend on the lender’s requirements. Documentation you may be asked to provide could include:
- Proof of income
- Bank statements
- Savings statements
- Proof of downpayment
- International credit report
- At least 3 to 6 months of employment history in Canada
- Proof of rental payments with a letter from the landlord
- Payment records from service providers like phone bills, insurance or utilities
- Reference letter from a recognized financial institution
Best Mortgage Options for New Immigrants to Canada
New immigrants can access mortgages through several types of lenders in Canada. The best option usually depends on your immigration status, down payment, and employment stability.
Big Bank Newcomer Mortgage Programs
Several major Canadian banks offer mortgage programs designed specifically for newcomers. These programs recognize that many new immigrants have strong financial profiles but limited Canadian credit history.
Examples include programs offered by banks such as RBC, Scotiabank, and CIBC. These programs may allow borrowers to qualify with limited Canadian credit history and alternative financial documentation. In many cases, permanent residents may qualify with down payments as low as 5% if the mortgage is insured.
Mortgage Brokers and Monoline Lenders
Mortgage brokers can also help newcomers access mortgages through monoline lenders. Working with a broker allows borrowers to compare multiple lenders at once and identify programs designed for applicants without extensive Canadian credit history.
Instead of applying with a single bank, brokers can evaluate options across several lenders and help newcomers find a mortgage that better fits their income, down payment, and credit profile.
Alternative Lenders
Some newcomers may not immediately qualify with traditional lenders upon arriving in Canada. Alternative lenders may offer mortgages with higher down payment requirements and higher interest rates. These mortgages are often used as short-term solutions until the borrower builds Canadian credit and can refinance with a traditional lender.
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Mortgage Programs for Canadian Newcomers
Most banks and lenders have mortgage programs designed for newcomers purchasing their first home in Canada. These programs offer home financing to newcomers with limited credit and employment history in Canada. Here are some of the programs offered by the Big 5 banks in Canada:
Scotiabank StartRight Mortgage Program helps permanent or temporary residents who have been in Canada for 5 years or less buy a first home. To qualify, your downpayment must come from your own resources and cannot be gifted. You must also meet all other standard credit criteria, residential mortgage standards, and maximum permitted loan amounts. Mortgage default insurance may be required if your loan-to-value (LTV) ratio is greater than 65%.
Toronto-Dominion (TD) offers a New To Canada Program that provides mortgages to newcomers who have been in Canada for 5 years or less and are permanent or temporary residents. To qualify, you will need to meet all of the bank’s eligibility and credit criteria.
Canadian Imperial Bank of Commerce (CIBC) has a Newcomer Banking Program that offers mortgages for newcomers with limited credit history or foreign workers with valid work permits. To qualify, you must be a permanent resident in Canada for 5 years or less or a temporary resident with a valid Canadian work permit of 12 months or greater. You must meet the minimum downpayment and credit approval criteria, income verification and other conditions set out by the bank.
Royal Bank of Canada (RBC) offers a Newcomer Advantage Program for permanent and temporary residents in Canada who have been in Canada for less than 5 years. To qualify for their newcomer mortgage, you must meet all bank eligibility and credit criteria and provide proof of entry into Canada and supporting documents (work permit/visa, permanent residence card).
Bank of Montréal (BMO) has the NewStart Program for permanent residents who immigrated to Canada in the last 5 years or non-permanent residents with valid work permits. To qualify for mortgages as a newcomer, you must meet the bank’s standard lending criteria.
Mortgage Default Insurance for Newcomer Mortgages
Canada’s 3 default mortgage insurers offer programs for newcomers with limited Canadian credit history. These insurers take on the risk from banks and lenders when you have less than 20% to put toward a downpayment on a home.
CMHC Newcomers is accessible to permanent and non-permanent residents, with no residency period required.
Sagen’s New to Canada Program is available to borrowers with a valid work permit or permanent residency and at least 3 months of full-time employment in Canada. You can be exempted from the employment minimum if you transfer under a corporate relocation program.
Canada Guaranty’s Maple Leaf Advantage is available to borrowers who have recently immigrated to Canada within the last 5 years and have permanent resident status, landed immigrant status, or a valid work permit and a minimum of 3 months of full-time employment in Canada. You can be exempted from the employment minimum if you are part of a professional employee relocation.
How to Get a Mortgage as a New Immigrant in Canada
Much like getting a traditional mortgage, there are similar steps to take to get a mortgage as a newcomer.
Determine How Much You Can Afford
Figuring out how much you can afford will help you find a home within your budget. Housing costs in Canada vary significantly depending on the province and area you choose to live in. Knowing your mortgage affordability can help you plan ahead and explore areas that fit within your means.
Start Building a Canadian Credit History
Taking steps to build your Canadian credit history can help make qualifying easier. Your credit score, built over time, determines the likelihood of being approved and can also influence the interest rates offered. Having solid financial health is crucial when preparing for homeownership.
Find a Mortgage Specialist and Get Preapproved
Once you’re ready to look for homes, getting preapproved or prequalified for a mortgage will go a long way in helping you determine the maximum mortgage amount a lender will allow you to borrow. It’s important to do your research and find a mortgage specialist who is not only experienced and knowledgeable but licensed to help you find the most suitable residential mortgage solution for you.
Note: You should be aware that a preapproval or prequalification occurs before purchasing a property, and it should not be considered the same as an approval that occurs after you’ve accepted an offer to purchase the subject property.
Find a Home That Fits Your Budget and Needs
Once you’ve been prequalified or preapproved and know your budget, you can begin looking for a home that fits your needs (and budget). You may want to find a real estate agent who is knowledgeable about market trends and the area you are looking to purchase in. They can help you assess comparables in the area and make a competitive offer.
Remember that just because you’ve been prequalified or preapproved for a certain amount doesn’t mean you have to max out your budget. Ensure you have financing conditions in place with your offer, as the lender will also need to review and approve the subject property.
Frequently Asked Questions (FAQ) About Mortgage Options for Newcomers
Can new immigrants buy a home in Canada?
New immigrants can buy a home in Canada if they meet residency and mortgage qualification requirements. Temporary residents may also be eligible to buy a home if they meet specific criteria. Canada’s federal foreign buyer ban generally applies to non-resident foreign buyers and foreign corporations purchasing residential property. These rules do not apply to permanent residents.
Can new immigrants get a mortgage in Canada?
Yes, new immigrants can get a mortgage in Canada. Many Canadian lenders offer mortgage programs specifically designed for newcomers. These programs may allow borrowers with limited Canadian credit history to qualify if they have stable income, valid immigration status, and a sufficient down payment.
Do I need mortgage default insurance if I put down less than 20%?
Mortgage lenders require borrowers to purchase default mortgage insurance for any mortgage when their downpayment is less than 20% and, in some cases, up to 35% for temporary foreign workers (TFW) or self-employed individuals of the home’s purchase price.
Can I qualify for first-time homebuyer incentives as a new immigrant?
If you’re a permanent resident in Canada, you can qualify for first-time homebuyer incentives provided you have the minimum qualifying downpayment and meet all other eligibility criteria. Non-permanent residents are typically not eligible for federal first-time homebuyer incentives. However, temporary residents with valid work permits may be eligible for some first-time homebuyer programs if they meet residency requirements for tax purposes.
Final Thoughts
Canada attracts many newcomers each year, many of whom are eager to put down roots and purchase a home in their new country. Without a Canadian credit history and employment, it can be challenging to meet the standard requirements to qualify for a mortgage. Securing a mortgage as a newcomer is achievable. Many banks and lenders understand the unique challenges immigrants face when securing a mortgage.
If you’re new to Canada and ready to purchase your first home, contact nesto mortgage experts for knowledgeable and tailored advice.
Why Choose nesto
At nesto, our commission-free mortgage experts, certified in multiple provinces, provide exceptional advice and service that exceeds industry standards. Our mortgage experts are salaried employees who provide impartial guidance on mortgage options tailored to your needs and are evaluated based on client satisfaction and the quality of their advice. nesto aims to transform the mortgage industry by providing honest advice and competitive rates through a 100% digital, transparent, and seamless process.
nesto is on a mission to offer a positive, empowering and transparent property financing experience – simplified from start to finish.
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