Are you new to Canada and discover that even though you have a good net worth and decent down payment, but can’t get approved for a mortgage from a local bank? Like many new immigrant house buyers, one of your main difficulties as an immigrant is an incomplete credit history in Canada. Unfortunately, many new immigrant home buyers find themselves caught up in the real estate cycle and are unable to purchase their first home because of a lack of credit history. As a result, most have to start as renters before they can buy. But don’t give up hope. There are mortgage products specifically created for new immigrants to Canada to accommodate their lack of Canadian credit history so they can buy a house in Canada with a mortgage.
One of the most common methods of gaining mortgage approval for a new immigrant in Canada is to use a secured credit card and build their Canadian credit history for at least six months. By using a secured credit card with you at all times, you can start building your credit history with little to no risk because your credit card is secured by some collateral of cash you deposited to the bank that issues the card. This method works best with immigrants who plan on building their credit history over time. Following that, another method is to sign up for a cellular phone plan with recurring monthly payments paid in full every single time. After six months, you are establishing your Canadian credit history with a perfect score.
Although credit score plays a major role in determining whether or not you can get approved for this type of mortgage, there are specific New to Canada mortgage products that allow new immigrant borrowers to qualify for a mortgage loan without waiting for their credit history to be built. Your mortgage broker will be able to assist you in finding the right lender that can accommodate your financial situation.
One way to find out about new immigrants’ mortgages in Canada is to look online at the website of the Canadian Mortgage and Housing Corporation (CMHC). They list information about all the different loans that are available to residents of Canada, regardless of you are on temporary Work Permit, Student Permit, or a new Permanent Resident in the past five years. You can register for free to receive updates on any new programs that are available for immigrants, or you can get the same information from a mortgage broker with insider knowledge.
What is the minimum time of residency required before someone can buy a house?
There is absolutely no minimum time of residency required for a non-permanent and permanent resident to buy a house.
New immigrants can stop renting and buy a house.
What are the qualifying criteria for non-permanent residents?
Non-permanent residents include recent graduates and workers on valid Work Permits in Canada.
You can qualify for the Temporary Resident mortgage program to purchase an owner-occupied property.
You will need to bring at least a 10% down payment from your own resources and have at least 3 months of full-time employment at the time of application.
This program qualifies based on the Stress Test criteria.
What criteria are applicable to Permanent Residents?
For permanent resident borrowers who have secured full-time employment, you can purchase an owner-occupied property with a minimum down payment of as little as 5%. You will need to have at least three months of full-time employment by the time you are applying for this mortgage.
This program is only valid if you have become a permanent resident within the past 60 months at the time of application, and do not have an established Canadian credit history.
Your option opens up to more flexible lending criteria when you have more than a 20% down payment. For example, with a 35% down payment, permanent resident borrowers do NOT need full-time employment to purchase or refinance an owner-occupied property.
This program is only valid if you have become a permanent resident within the past 60 months at the time of application, and do not have an established Canadian credit history.
It is best to have a mortgage broker go through these details and recommend a few things for you.
Speaking of down payment, you can watch the other video about unpacking the different sources of the down payment for mortgages.
Will this product work for pre-construction properties too?
Yes, this product works for purchasing pre-construction properties as well.
But, for pre-construction properties, new to Canada immigrants can benefit more from another lending product that qualifies based on the property’s current value, instead of the purchase price.
You want to check out the video below that unpacks in detail about 100% pre-construction financing.
Any other things non-permanent and permanent residents should know about?
Becoming a homeowner can be sooner than you might think.
It doesn’t hurt to speak with a mortgage broker to discuss your situation. At the very least, you have a forecast as to how and when you can become a homeowner soon.
Speaking with a mortgage broker doesn’t cost you money. Speak with a mortgage broker who will listen and work with you.
Which lenders offer this program?
These programs are offered by almost all lenders in the network, ranging from the bank to non-bank lenders, each with slightly different lending requirements to qualify. Have a mortgage broker go through these details and recommend the right ones for you.
At that time, you can decide which lender is right for you.
Jermaine Hinds, Mortgage Broker
Jermaine Hinds is a licensed mortgage broker for mortgages across Canada.
Your mortgage options are powered by Matrix Mortgage Global (Brokerage Lic. #11108). This means you gain access to more than 100 different lending partners who are ready to offer you various mortgage solutions, including mortgage renewals, refinancing, second mortgages, home equity loans, bridge loans, and other specialized mortgage products.
Read the previous Press Release here.
