Newcomers Mortgage - Options for New Immigrants

WOWA Simply Know Your Options

Many banks and lenders offer mortgage options for new immigrants to Canada to help them get settled into their own home. This page will look at mortgages for newcomers, how they work, which banks offer them, and the requirements to qualify for a Canadian newcomers mortgage.

What Is a Newcomer Mortgage?

A newcomer mortgage is a special type of mortgage offered by some banks in Canada that are designed to help newcomers get a mortgage without a Canadian credit history or without an established employment history. The main reasons why it can be difficult for newcomers to get a regular mortgage include:

• Lack of Canadian Employment History

  You must have a stable income to get a mortgage in Canada. Banks usually require at least two years of stable employment for regular mortgages, but a newcomer's mortgage can bypass this requirement.

• Lack of Canadian Credit History

  An established credit history is also required for a regular mortgage. Newcomers without an established credit history may be able to get a newcomer's mortgage if they qualify.

For those new to Canada, you might not have a work history or credit history in Canada. With a newcomer mortgage program, banks are more lenient on their eligibility requirements. However, you will need to meet certain criteria in order to be considered a newcomer to Canada.

Am I Eligible for a Newcomers Mortgage?

Mortgages for those new to Canada can be insured against mortgage default by the Canada Mortgage and Housing Corporation (CMHC), Sagen, or Canada Guaranty. These insurers all have basic borrower qualifications. In order to be eligible for a newcomers mortgage:

• Immigrated to Canada within the last 5 years

  In order to be considered a newcomer, you must have immigrated to Canada within the last 5 years. If you’ve been in Canada for longer than 5 years, you are no longer considered to be a new immigrant.

• Have legal status in Canada

  You must be in Canada as a temporary or permanent resident. This means that you should be a permanent resident/landed immigrant, or be a non-permanent resident with a work permit. A temporary resident may face further restrictions on getting a mortgage or even buying a home in certain areas.

• Have been employed full-time in Canada for at least 3 months

  While you might not need to have 2 years of employment history for a new immigrant mortgage, you will need to have at least some full-time employment history. You will need at least three months of full-time employment history in Canada unless you are being relocated to Canada by your current employer.

• Have a down payment of at least 5%

  You will need to make a down payment of at least 5%. This minimum down payment requirement can be higher, such as if the home price is over $500,000. Your lender can require the minimum down payment to come from your own resources and savings, rather than being gifted or borrowed. Some lenders may require a higher down payment, such as 20%, if you’re not able to qualify for an insured mortgage. The minimum down payment can even be as high as 35% if you don’t have a Canadian credit history.

• Meet qualification ratios

  Your debt service ratio shows how much of your income goes to service your debt. The higher this ratio, the worse it is, since you’re spending more of your income to service debt. You will need to have a gross debt service ratio (GDS) of 39% or less, and a total debt service ratio (TDS) of 44% or less. GDS measures how much of your gross income is spent on housing-related expenses, while TDS measures how much of your gross income is spent on all of your debt.

  The mortgage stress test rate will be used to test your Gross Debt Service (GDS) and Total Debt Service (TDS) ratios. Your foreign debt is included when calculating your GDS and TDS, but your foreign rental income is not included.

If you meet these basic qualifications, it’s now time to choose your mortgage lender. This could range from big Canadian banks to smaller local lenders. You can also work with a mortgage broker to help you get a newcomer mortgage.

Newcomer Mortgage Lenders

RBC Mortgages for Newcomers to Canada

Canadian Credit History: Not required

Down Payment Information:

• You can make a down payment less than 20%, but you'll need to pay for mortgage default insurance and your amortization will be limited to 25 years
• If you make a down payment that is 20% or more, you can have an amortization period of up to 30 years
• You can only make a down payment less than 35% if you have at least two years of employment history
• If you haven't been working for at least two years, or cannot confirm your employment, then the minimum down payment is 35% if you have been working for at least three months in Canada

  Other Requirements:

• RBC may ask for a letter of reference from a bank in your home country if you don't have at least two years of employment history

Scotiabank StartRight Mortgage Program

• Down Payment Information:
• The minimum down payment is 5%, but Scotiabank may require you to make a larger down payment
• Mortgage default insurance may be required if you make a down payment less than 35%
• The down payment cannot be gifted or borrowed

  Other Requirements:

• Available for permanent residents that have been in Canada for three years or less
• Also available to temporary residents, such as international students and foreign workers, that want to buy a home in Canada

TD Mortgages for Newcomers

Canadian Credit History: Not required if you are a permanent resident and have been in Canada for 5 years or less

Other Requirements:

• You must have proof of residency, such as a permanent resident card, confirmation of permanent residence, or a temporary permit

CIBC Mortgages for Newcomers

Canadian Credit History: Not required for the permanent residents or Canadian citizens that are returning to Canada or for temporary residents with a work permit

• CIBC has three mortgage programs for newcomers: the CIBC Newcomer to Canada Program Mortgage, the CIBC Newcomer to Canada PLUS Program Mortgage, and the CIBC Foreign Worker Program Mortgage
• The CIBC Newcomer to Canada Program Mortgage is for newcomers that have been in Canada for less than 5 years, have a limited Canadian credit history, but have enough Canadian income to qualify for a mortgage
• The CIBC Newcomer to Canada PLUS Program Mortgage is for permanent residents or Canadian citizens that are returning to Canada, and don't require any Canadian credit history
• CIBC Foreign Worker Program Mortgage is for temporary residents that have a work permit that is valid for 12 months or more and requires no Canadian credit history

BMO Newcomers to Canada Mortgage

Canadian Credit History: BMO’s NewStart Program makes it easy for newcomers to Canada to start building their credit history with a Canadian credit card, even if they don’t have an existing credit history

• BMO's mortgage for newcomers has a 130-day rate guarantee, which gives you time to find a home to buy or to compare mortgage rates with other lenders

Desjardins Newcomers to Canada Package

Canadian Credit History: Desjardins lets you start building your credit score quicker with a free credit card without needing any credit history

• As Quebec’s largest mortgage lender, Desjardins offers a variety of mortgage products with competitive mortgage rates

Whether you haven’t arrived in Canada yet or you are already here, it’s never too early or late to start looking at your new immigrant mortgage options. Knowing the steps can help you prepare for your home search and being approved for a mortgage. Here are the steps to getting a newcomers mortgage in Canada:

1. Find out how much you can afford

   Starting off the process by knowing how much you can afford will help you when you start looking for a home. You don't need to settle for a home that maxes out what you can afford either. Knowing your mortgage affordability lets you make an informed choice and lets you plan ahead. You can calculate your affordability by using online calculators. This gives you a rough guideline that you can follow. You’ll also want to start saving up for a down payment.

2. Build your Canadian credit history

   You should try to build your Canadian credit history even before you decide that you want to buy a home. This can be as simple as paying your phone or cable bills. Many banks also offer free credit cards to newcomers that have no credit history. This allows you to start establishing a credit history and building your credit score.

3. Get a mortgage pre-approval

   For a more firm answer of how much mortgage you can borrow, newcomers may want to get a mortgage pre-approval from a bank or lender. You will know the maximum mortgage amount that the lender is willing to let you borrow, along with rates and the monthly mortgage payment amount. You will also receive a mortgage pre-approval letter which you can then use when shopping for a home. You’ll also know how much down payment you will need to make so that you can start saving up for it.

4. Find a real estate agent

   Once you have your finances in order, it’s time to find a local real estate agent. Your real estate agent will help you find a home and make an offer. Once your offer has been accepted, you’ll need to be approved for a mortgage. If you received a pre-approved mortgage from a bank or lender, you don’t necessarily need to get a mortgage with them. You can shop around with other mortgage lenders or use a mortgage broker to help you in your search for the best rate.

Mortgage default insurance is required for mortgages that have a down payment of less than 20%. If you plan on making a down payment of less than 20%, you will need to pay for mortgage default insurance. The three mortgage insurers in Canada for newcomer mortgages are CMHC, Sagen, and Canada Guaranty. These mortgage default insurers all have different guidelines and insurance premium rates. Your bank or mortgage lender may work with just one of these insurers, or more than one.

CMHC Requirements for Newcomers

The CMHC has a mortgage default insurance program for newcomers. Depending on whether you are a permanent resident or a non-permanent resident, the requirements may be different.

CMHC Requirements for Newcomers

Other CMHC eligibility rules are the same as for other homebuyers. CMHC insurance is only available on homes with a maximum purchase price of $1.5 million for owner-occupied properties and $1 million for small rental. A minimum down payment of 5% is needed for the first $500,000, increasing to 10% for the remainder. The amortization period can be up to 25 years, but buyers may qualify for a 30-year amortization through CMHC Home Start.

Permanent residents can purchase multi-unit homes that they occupy, with a 1-2 unit home requiring a minimum down payment of 5%, and a 3-4 unit home requiring a down payment of 10% or more. Permanent residents, including newcomers, can purchase rental property that is non-owner occupied. They will need to make a minimum down payment of 20% for 2-4 unit rental properties.

CMHC Insurance Premium Rates for Owner-Occupied Newcomers Mortgages

CMHC Insurance Premium Rates for Non-Owner-Occupied Newcomers Mortgages

Sagen New to Canada Program

Sagen and Canada Guaranty are private mortgage default insurers that are an alternative to CMHC insurance. Sagen's New to Canada Program and Canada Guaranty Maple Leaf Advantage allow new immigrants to get a mortgage on 1-4 unit houses with the following eligibility criteria. Their requirements are summarized in the table below.

Sagen New to Canada Program and Canada Guaranty Maple Leaf Advantage Requirements

Private Insurance Premium Rates for Newcomers' Mortgages

Yes, foreigners and non-residents can get a mortgage to purchase a home in Canada. However, banks will have more stringent requirements. For example, they can require a minimum down payment of 35% or more. You may also need to provide a reference letter from your bank, provide proof of income and proof of down payment, and have your international credit report checked. Your lender may also require you to have a Canadian bank account in order to make your mortgage payments.

Some insurers, such as Sagen and Canada Guaranty, will not consider any foreign rental income as part of your income calculation. Rental income from properties outside of Canada will not be counted towards your income when applying for a mortgage in Canada.

If you’re a permanent resident, you can qualify for first-time homebuyer incentives, such as land transfer tax rebates and the federal government's shared equity program. If you’re a non-permanent resident, such as if you’re a temporary worker or an international student, some provinces might not offer a land transfer tax rebate. For example, Ontario only provides a land transfer tax rebate for first-time homebuyers that are Canadian citizens or permanent residents.

Yes, you can buy a home in Canada at any time. However, it can be harder to evaluate homes if you aren’t able to do so in person. Virtual tours can be done online, and you may even be able to open a Canadian bank account before arriving in the country. Closing can also be done virtually. Fully online closings usually require you to meet using a platform such as Zoom or Skype. Your signatures for documents can be done electronically.

If you’ve been rejected by Canada’s major banks, then you can try using alternative mortgage lenders, such as B-lenders and private mortgage lenders. If you still can’t get approved for a mortgage, you can always try to get financing yourself from a lender in your home country, such as by borrowing against the equity in your home. Not everyone buying a home in Canada requires a mortgage either. According to Mortgage Professionals Canada, 14% of homes in Canada were bought using cash without a mortgage between 2013 and 2015. If you’re a foreigner with enough cash, you can purchase a home in Canada outright without needing to get a mortgage.

Note that Canada has banned foreigners from buying a home in Canada starting in 2023, with the ban now in effect until January 1, 2027. The ban does not apply to certain areas outside of Census Metropolitan Areas or Census agglomerations.