How to Qualify for a Mortgage

Canada has witnessed a rise in international migration in recent years, attracting new residents who want to settle in the country. For these new faces, owning a home may be a top priority. In this article, we aim to guide new immigrants through the process of obtaining a mortgage and becoming homeowners.

Eligibility for a Typical Mortgage

If you are a Permanent Resident or have received confirmation of your Permanent Resident status, you can apply for a typical mortgage with a down payment of 5% – provided that you have good credit.

Options for New Immigrants with Limited Credit

Even if you are a Permanent Resident with limited credit or have not yet qualified for Permanent Residency but have a valid work visa, there are still mortgage options available to you. There are several ‘New to Canada’ mortgage programs provided by CMHC, Genworth Financial and Canada Guaranty Mortgage Insurance that cater to this group of homebuyers.

To qualify for these programs, you must have immigrated or relocated to Canada within the last 60 months and have had at least three months of full-time employment in Canada. Individuals seeking credit of 90.01-95% must produce an international credit report (Equifax or Transunion) that demonstrates a strong credit profile, or provide two alternative sources of credit that show timely payments for the past 12 months, including rental payment history and another source such as hydro/utilities, telephone, cable, cell phone or auto insurance. For individuals looking for 90% financing, a letter of reference from a recognized financial institution or six months of bank statements from a primary account is required.

Working with a mortgage broker can help you understand your options and determine the best program and mortgage choice for you.

What to Know Before Applying for a Mortgage

When it comes to submitting a mortgage application and getting approved, there are several things you need to know as a new immigrant to Canada:

1. Supporting Documents: If you have weak credit, supporting documents can help your application. These may include proof of income, 12 months of rental payments or a letter from your landlord, documented savings, bank statements, and/or a letter of reference from a recognized financial institution. These documents provide the lender with a picture of your reliability as a borrower.

2. Building Your Credit Rating: Your credit rating is one of the most important factors in obtaining a mortgage. You can build your credit by using and paying off a credit card each month, as well as paying other bills such as utilities, cell phones, and rent.

3. Start Saving: A down payment is a crucial upfront cost for securing your future as a homeowner. The down payment can be either 5% or 10% depending on your status, but for homes costing $500,000 or more, the minimum down payment will be 5% for the first $500,000 and 10% for any amount over $500,000 – regardless of residency status.

4. Choosing a Mortgage Provider: Once you are ready to get your mortgage, you need to decide where you want to borrow from. Your options include banks, credit unions, monolines, or a mortgage broker who may offer additional savings.

Buying a house is a thrilling step for anyone, but it can be especially exciting for new immigrants to the country. With a little knowledge and preparation, purchasing a home is a completely achievable goal.

Click here to schedule a call with a mortgage specialist to help you navigate this process.