This Page's Content Was Last Updated: February 28, 2024
One of the biggest challenges for Canadians looking to purchase property in the US is securing financing. Traditional U.S. mortgage lenders often have strict requirements that can be difficult for Canadians to meet, or they may charge a higher interest rate for foreign nationals. That's where cross-border mortgage lenders come in!
Cross-border lenders are typically the American subsidiaries of Canadian banks that provide financing to Canadians looking to purchase property in the U.S. They understand the unique challenges and requirements that come with cross-border transactions and can offer tailored solutions to meet the needs of Canadian buyers, such as for Canadian snowbirds. Learn about the top cross-border mortgage lenders, and the benefits of working with a cross-border lender, so that you can make your dream of owning property in the U.S. a reality!
- Use your Canadian credit history
- No pre-payment penalty
- Save up to $4,500 USD on closing costs on U.S. mortgages42
- Working with a cross-border mortgage lender allows you to use your Canadian credit history for U.S. mortgages.
- A minimum down payment of 20% is generally required for primary residences and vacation homes, and 25% for investment properties.
- Some lenders, such as RBC Bank, do not require a physical presence in the United States, thanks to online and mail processes.
- It typically takes 45-60 days from application to closing for a cross-border mortgage, so plan ahead before buying a home in the United States.
Best Cross-Border Mortgage Lenders
- ✅ Uses your Canadian credit history
- ✅ No prepayment penalties
- ✅ No foreign national premium
- ✅ Sign and submit documents online
- ✅ Close on your U.S. mortgage in Canada
- ✅ Save on average up to $4,500 USD in closing costs compared to other lenders
- 💡 Requires a minimum down payment of 20%
- 💡 Does not offer fixed-rate mortgages
RBC Cross-Border Home Financing is a great option for Canadian homebuyers looking to finance the purchase of a property in the United States, as well as those looking to access their U.S. home equity or are renewing their U.S. mortgage. Here’s what you should know about the features of RBC’s U.S. mortgages:
- Uses your Canadian credit history: The main benefit of a cross-border mortgage is that it allows Canadians to use their Canadian credit history when applying for a U.S. mortgage. This can be a huge advantage, as it avoids the need to build a separate U.S. credit history from scratch. RBC will also consider other factors, such as your assets and liabilities, as well as your payment history, in both Canada and the U.S.
- No prepayment penalties: There are no prepayment penalties if you choose to pay off your mortgage early or make lump-sum prepayments. This gives you the flexibility to pay off your mortgage faster without incurring any additional fees.
- No foreign national premium: Unlike some U.S. lenders, RBC does not charge a foreign national premium for their U.S. mortgages. This can save you thousands of dollars in upfront costs.
- Sign and submit documents online: Instead of having to visit a branch or call in, you can complete your mortgage application entirely online, with a convenient and streamlined process for signing and submitting documents virtually. This can save you time and hassle when going through the cross-border mortgage process. RBC is the only Canadian cross-border mortgage lender that lets you apply for a U.S. mortgage online.
- Close on your U.S. mortgage in Canada: RBC Cross-Border Home Financing allows you to close on your U.S. mortgage while still in Canada with a mail-away closing, making the process even more convenient for Canadian homebuyers.
- Save on closing costs: RBC doesn’t charge any bank or lender fees, which will save the average borrower around $4,500 USD in closing costs. This includes savings by skipping these typical U.S. mortgage fees:
| Type of Fee | Typical Fee Amount |
|---|---|
| Application Fee | $950 |
| Processing Fee | $950 |
| Commitment Fee | $500 |
| Underwriting Fee | $500 |
| Origination Fee | 0.5% - 1% of the loan amount |
| Foreign National Premium | 1% - 2% of the loan amount |
- Use your Canadian credit history
- No pre-payment penalty
- Save up to $4,500 USD on closing costs on U.S. mortgages42
RBC positions itself as the only U.S.-based bank designed for Canadians. That’s because, unlike Canada’s other cross-border banks that deal with U.S. customers, RBC only serves Canadians, meaning that their focus is entirely on helping Canadians with their cross-border banking.
RBC U.S. HomePlus™ Advantage is one way that RBC Bank caters to Canadian homebuyers looking to purchase property in the United States. This program connects Canadians with tools, guides, and experts that will help them during their U.S. home-buying process, such as connecting them to U.S. real estate agents, cross-border tax and legal experts, online home insurance providers, and U.S. property listings.
In addition to lower closing costs, working with an RBC U.S. HomePlus™ Rewards participating real estate agent can earn you up to $9,500 in cash when buying or selling a U.S. home. You will also get free guides and webinars on buying a home in the U.S. For those that already have a home, there are no underwriting fees when you refinance, for savings of $924 USD, or you can get a no-fee HELOC with RBC. That means no closing costs on your HELOC, such as origination fees or title insurance costs, if you keep your HELOC open for at least 24 months.
RBC Bank U.S. mortgage borrowers will also get an annual fee waiver for RBC’s Premium Checking account, which is usually priced at $99.50 per year. This U.S. bank account gives you unlimited transactions, preferred foreign exchange rates between CAD and USD, and access to over 50,000 no-fee ATMs in all states.
RBC U.S. Mortgage Rates
RBC only offers adjustable-rate mortgages (ARMs), not fixed-rate mortgages, which means that your mortgage interest rate and monthly payments can fluctuate over time. These are available as 3, 5, 7, or 10-year ARMs, also known as 3/1, 5/1, 7/1, and 10/1 ARMs, that are amortized over 30 years. This means that the RBC U.S. mortgage rate will remain fixed for the first 3, 5, 7, or 10 years and then will become a variable interest rate after that, with the interest rate changing at most once per year. Paying off your mortgage will take 30 years if you don’t make any prepayments.
Some mortgage terms may differ, such as having an adjustment period of 6 months rather than one year. This allows for your interest rate to be adjusted more frequently. Your ARM mortgage will have initial and periodic adjustment caps, which is the maximum amount that your rate can increase or decrease by, as well as a maximum interest rate. Unlike variable mortgages in Canada that are based on the prime rate, the interest rate on adjustable rate mortgages at RBC Bank, N.A. can be based on the 30-day average SOFR (Secured Overnight Financing Rate), or other benchmarks, such as the Cost of Funds Index (COFI).
Sometimes, an escrow account might be required. This is an account where your property taxes and homeowner’s insurance premiums are held, which the lender uses to pay these bills on your behalf. If escrow is required, your monthly mortgage payment will be higher.
Down Payment
You will need to make a minimum down payment of 20% if the property will be a residence or vacation home, or a down payment of 25% for investment properties. That’s because smaller down payments require the purchase of mortgage insurance, which in the case of FHA-insured mortgages, are only available to U.S. citizens, permanent residents, or those with a Social Security Number (SSN) and authorized to work in the United States.
Closing Costs
While RBC has reduced closing costs by not charging bank or lender fees, there are still other costs to consider when closing on a U.S. mortgage. It’s a good idea to prepare for closing costs starting at 2.5% of your home’s purchase price. For example, if you are purchasing a home for $200,000 USD, you should budget for at least $5,000 USD in closing costs. This can vary depending on the state and specific property being purchased.
U.S. Home Equity
If you already have a home in the U.S., you may be able to access equity in your property through an RBC Home Equity Line of Credit (HELOC). A HELOC is a line of credit that uses your home as collateral, allowing you to borrow against the value of your property at any time, up to 80% of your home’s equity, with interest-only payments for 10 years. This can be a useful tool for Canadians looking to invest in additional U.S. properties or make renovations on their existing U.S. property, or even for those looking to have quick and easy access to U.S. cash for personal expenses.
Apply for an RBC No-Fee HELOC by October 31, 2024 and RBC will pay your:
- Origination Fee
- Appraisal Fee
- Credit Report Fee
- Title Search
- Title Insurance
- Flood Determination Costs
- Filing Fees
To access money from your RBC U.S. HELOC, you can transfer money from your HELOC to your checking account online or through telephone banking. You can also use checks that draw from your HELOC to transfer funds or make purchases. RBC Bank is currently offering no-fee HELOCs until October 31, 2024. This means that RBC will cover certain closing costs with the HELOC, such as origination fee, appraisal fee, and credit report fee, for loan amounts between $25,000 and $750,000, for customers that have an RBC Bank Premium Checking account. On top of that, RBC will also waive the annual fee on the Premium Checking Account, resulting in savings of $99.50 annually.
Another option to borrow money using your home equity is by refinancing your property in a cash-out refinance. This allows you to take out a new mortgage for more than your current outstanding balance and take out the difference in cash. This can be an attractive option if you need a large sum of money for investments or other expenses. Currently, RBC doesn’t charge any underwriting fees on new refinancing applications submitted before October 31, 2024.
- Use your Canadian credit history
- No pre-payment penalty
- Save up to $4,500 USD on closing costs on U.S. mortgages42
- ✅ Uses your Canadian credit history
- ✅ No prepayment penalties
- 💡 Requires a minimum down payment of 20%
- 💡 You need to be physically present for the closing or appoint a power of attorney
TD Bank offers U.S. home lending solutions for Canadians buying a home in the U.S. Just like most U.S. mortgages, there are no prepayment penalties for making additional or extra payments on your mortgage loan. TD Bank also uses your Canadian credit history, as well as your Canadian income, assets, and liabilities, when considering your application. Values in Canadian dollars will be converted to U.S. dollars. One thing to note is that you will need to make a down payment of at least 20%.
Applying for a U.S. mortgage with TD Bank generally takes from 45 to 60 days. Unlike RBC Bank, you can’t apply for a TD U.S. mortgage online. Instead, you will need to visit one of TD Bank’s branches in the U.S., call their cross-border banking support line, or connect with a TD loan officer in the U.S.
You will be required to be physically present in the U.S. at the closing agent’s office, or appoint a power of attorney to attend on your behalf, during closing. That’s not as convenient as the mail-away closing option that RBC Bank offers, which lets you complete the mortgage process entirely within Canada.
TD Bank offers home equity loans and HELOCs for Canadians looking to access their home equity in their U.S. properties.
- ✅ Uses your Canadian credit history
- ✅ No prepayment penalties
- 💡 Requires a minimum down payment of 20%
- 💡 Requires at least $25,000 USD in deposit accounts at BMO to qualify
BMO Bank’s cross-border mortgages are available through their Gateway Program. This allows Canadian customers of BMO to use their Canadian credit history to borrow up to $2 million USD towards the purchase or refinance of a property in the U.S.
Self-employed borrowers can qualify, and condos are included as an acceptable property type. Unlike RBC, BMO Bank also offers conventional fixed-rate mortgages in addition to their adjustable rate mortgages (ARMs).
For the mortgage closing, BMO recommends that you attend the closing in person. However, you can also have your closing documents notarized at a U.S. Consulate located in Canada.
Similar to TD Bank, you can’t apply for a BMO Bank U.S. mortgage online. Instead, you will need to call or fill out a form to have them contact you. To qualify for a BMO cross border U.S. mortgage, you will need to be a client with a Canadian bank account at Bank of Montreal that holds at least $25,000 USD, a client with a U.S. bank account at BMO Bank with at least $25,000 USD, or as a client at BMO Premier Services.
- ✅ Uses your Canadian credit history
- ✅ No prepayment penalties
- 💡 Requires a minimum down payment of 20%
- 💡 Can’t apply online
CIBC Bank USA offers U.S. mortgages for Canadians with a minimum down payment of 20%. They also use your Canadian credit history and do not charge prepayment penalties. However, unlike RBC Bank, you cannot apply for a CIBC Bank USA mortgage online. Instead, you will have to contact your CIBC relationship manager.
In the U.S., CIBC Bank USA offers fixed-rate mortgages, adjustable-rate mortgages, refinancing, HELOCs, and construction loans. Mortgages are available in all 50 states.
- Use your Canadian credit history
- No pre-payment penalty
- Save up to $4,500 USD on closing costs on U.S. mortgages42
Documents to Apply for a U.S. Mortgage
When applying for a U.S. mortgage, you will need to provide various documents and information to the lender. Canadians can use their Canadian documents to apply. The table below shows the Canadian documents required, if applicable, and the equivalent U.S. document name.
| Canadian Documents | U.S. Equivalent | What You Need | |
|---|---|---|---|
| Proof of Income | |||
| Salaried Employees | T4 Statement of Remuneration Paid | W-2 Wage & Tax Statement | Most recent two years, with pay stubs showing past 30 days |
| Self-Employed |
|
| Most recent two years for any entity that you own 25% or more |
| Retired | T4A Statement of Pension, Retirement, Annuity, and Other Income | Social Security or Awards Pension Letter | Copy of most recent statement, and/or proof that income will continue for at least three years |
| Investment Income |
|
| Most recent two years |
| Tax Documents |
| Form 1040, U.S. Individual Income Tax Return | Most recent two years |
| Citizenship/Identity | |||
| |||
| Social Insurance Number (SIN) | Social Security Number (SSN) | ||
| Proof of Assets | |||
| Canadian bank account statements | Past two months | ||
| |||
| Only if used to close on your home | ||
| Proof of Insurance | |||
| |||
Why Work with a Cross-Border Mortgage Lender
Working with a cross-border mortgage lender, such as RBC or TD Bank, can offer many benefits for Canadians looking to purchase property in the United States.
1. Familiar with the financial and credit systems in both Canada and the U.S.
First and foremost, these lenders have a deep understanding of both the Canadian and U.S. markets and can provide guidance on navigating the differences between the two. They can understand your unique situation as a Canadian borrower, including factors like currency exchange and tax implications, and help explain subtle nuances and differences that make buying a home in the U.S. different from the Canadian home buying process.
2. Access to Canadian credit history and assets
When applying for a U.S. mortgage with a cross-border lender, they will use your Canadian credit history and assets as part of their evaluation process. This can be beneficial for Canadians who may not have an established credit history in the U.S., making it easier to qualify for a mortgage.
Canadian cross-border lenders also don’t charge a foreign national premium that many U.S. banks will. That's because U.S. banks don't typically lend to foreign nationals, and when they do, they often charge higher interest rates and fees because of their higher risk. This can make it difficult for Canadians to secure financing through traditional U.S. lenders. Canadian cross-border lenders have access to your Canadian assets, so their risk is reduced.
3. Convenience of buying a home in the U.S. without being physically present
Working with a cross-border lender can offer convenience and peace of mind for Canadians purchasing property in the U.S. With options like mail-away closing and online applications that RBC Cross-Border Home Financing offers, the process can be less time-consuming and more efficient than having to visit a branch in the United States and attend the closing in person.
Frequently Asked Questions (FAQs)
A cross-border mortgage is a type of loan that allows Canadian borrowers to use their Canadian credit history when financing a property located in the United States.
Using a cross-border mortgage lender means that Canadians don’t need to establish credit history in the U.S. These lenders also have expertise in navigating the complexities of cross-border transactions, making the process smoother for borrowers.
When choosing a cross-border mortgage lender, it is important to consider their experience and expertise in working with Canadian borrowers and financing properties in your desired location. It is also important to compare interest rates, fees, and terms to ensure you are getting the best deal.
While cross-border mortgages can be used to finance a variety of properties, it is important to check with your lender to ensure they are willing to finance the specific type of property you are interested in. Some lenders may have restrictions on certain types of properties. For example, many lenders will not allow mortgage financing for timeshares, houseboats, mobile homes, manufactured homes, and co-ops.