If you are new to Canada and need a mortgage to finance a home purchase, there are several steps you must take and supporting documentation you may need to provide. The type of mortgage you will qualify for, and what documentation you’ll need to provide, depends on whether or not you are a permanent resident, what your credit rating is and how much you have saved for a down payment.
What to Expect
Build Your Credit
Alternative Credit Supporting Documentation
Save for a Down Payment
Calculating Your Mortgage Default Insurance Premium
Choose Your Mortgage Amortization Period
Select Your Mortgage Term
Choose Between a Fixed Rate vs. a Variable Rate
Overcoming The Challenge
If you are a permanent resident and have a strong credit rating, you may be able to qualify for a typical mortgage. If, however, you don’t meet all of the qualification criteria for a typical mortgage, you may still be able to obtain a mortgage through one of the New to Canada Programs offered by the Canada Mortgage and Housing Corporation (CMHC), Genworth Financial and Canada Guaranty.
New to Canada Program Mortgages
Canada’s three mortgage default insurance providers each have their own New to Canada Program, aimed at helping newcomers obtain a mortgage in order to purchase a home. The requirements for all three programs are similar, you’ll find numerous breakdowns below.
Pre-Approval
House Hunting
Funding
Closing
A Breakdown and Strategy
Build Your Credit
Apply for, use and pay off a credit card each month
Pay your bills in full and on time, including rent, utilities and telecommunication services
Apply for small loans from your bank and make regular payments
Prove that you have a consistent source of income, by staying with the same employer for an extended period of time
If you don’t have a strong Canadian credit rating, you can also use your credit rating from a Commonwealth country, such as the United States, the United Kingdom or Australia.
Save for a Down Payment
If you're buying a home with a purchase price of $500,000 or more, the minimum down payment is 5% of the first $500,000, and 10% of any amount over $500,000. This rule applies regardless of your residency status.
Choose Your Mortgage Amortization Period
Choose Between a Fixed Rate vs. a Variable Rate
Alternative Credit Supporting Documentation
A valid work permit or landed immigrant status
Proof of income through either an employment contract or pay stubs
Proof of 12 months of rental payments and/or a confirmation letter from a landlord
Regular payments towards utilities, telecommunications, insurance, etc. and/or confirmation letter from service provider(s)
Letter of reference from a recognized financial institution
Several months of bank statements
Documented regular savings for 12 months
An international credit report
Gathering this information beforehand will help streamline the mortgage application process.
Calculating Your Mortgage Default Insurance Premium
In Canada, there are three providers who offer mortgage default insurance through their own New to Canada Programs: CMHC, Genworth Financial and Canada Guaranty. CMHC is the most popular of the three, but all of them offer the same premium rates, as seen below.
Down Payment (% of Home Price): 5% - 9.99%
Premium % on Loan Amount: 3.60%
Down Payment (% of Home Price): 10% - 14.99%
Premium % on Loan Amount: 2.40%
Down Payment (% of Home Price): 15% - 19.99%
Premium % on Loan Amount: 1.80%
Down Payment (% of Home Price): 20% - 24.99%
Premium % on Loan Amount: 1.25%
Down Payment (% of Home Price): 25% - 29.99%
Premium % on Loan Amount: 0.75%
Down Payment (% of Home Price): 30% - 34.99%
Premium % on Loan Amount: 0.60%
Select Your Mortgage Term
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