Canada has seen a surge of international migration over the last few years and, with all these new faces in town wanting to plant roots in this great country, we wanted to touch base on some of the details surrounding mortgages and how new immigrants can qualify to be homeowners! Buying a house is an exciting step for anyone, but it is especially so for individuals who are new to the country. As daunting as it may seem, purchasing a home is completely possible with a little knowledge and preparation. If you are new to Canada and looking to get a mortgage, connect with a DLC Mortgage Professional today for expert advice and options that best suit you!
If you are already a Permanent Resident or have received confirmation of Permanent Resident Status, you are eligible for a typical mortgage with a 5% down payment – assuming you have good credit. Some additional criteria for qualifying includes: Must have immigrated or relocated to Canada within the last 60 months Must have a valid work permit or obtained permanent residency All debts held outside of the country must be included in the Total Debt Servicing Ratio (GDS/TDS) Rental income earned outside of Canada is excluded from the GDS/TDS calculation Guarantors are not permitted Owner-occupied properties if putting less than 20% down payment.
For Permanent Residents with limited credit, or individuals who have not yet qualified for Permanent Residency, there are still options! In fact, there are several ‘New to Canada’ mortgage programs through CMHC, Sagen™ and Canada Guaranty Mortgage Insurance, which cater to this group of homebuyers.
NEW TO CANADA PROGRAMS
To qualify for these New to Canada programs, you must have immigrated or relocated to Canada within the last 60 months and have had three months minimum full-time employment in Canada.
For individuals looking for 90% credit, a letter of reference from a recognized financial institution OR six (6) months of bank statements from a primary account will be required.
If you are seeking credit of 90.01% to 95%, you will need to produce an international credit report (Equifax or Transunion) demonstrating a strong credit profile OR two alternative sources of credit demonstrating timely payments (no arrears) for the past 12 months. The alternative sources must include rental payment history and another alternative, such as hydro/utilities, telephone, cable, cell phone or auto insurance.
Another option for New to Canada residents, depending on your residency status and credit history, are alternative lenders such as B-Lenders and MICs (Mortgage Investment Corporation). It is important to note that alternative lenders will require a down payment of 20%. Alternative lenders cater to individuals which lack a strong credit history, or a guaranteed income (recent immigrants, or the self-employed, for instance). As a result, these lenders generally have lower entry qualifications, which are offset by higher interest rates.
WHY IS ALTERNATIVE LENDING NECESSARY?
CRA arrears Income issues such as non-traditional income as with self-employed borrowers Credit issues such as low credit score, credit arrears, current mortgage or even bankruptcies Unexpected liens on title Foreclosure situations Unique financing needs/opportunities If you do not qualify for the New to Canada programs, or a standard mortgage, reach out to a DLC Mortgage Professional and they can help you navigate the alternative options!