Buying a home when you’re new to Canada: It’s easier than you think!

Are you new to Canada and think that buying a home is out of reach? Think again! With good planning and sound advice from real estate and mortgage brokers, it can be done.

Common myths

New immigrants often rely on information from family and friends. It’s understandable: these are people you know and trust. But some of what they tell you may be incorrect or outdated. Let’s look at the two most common myths.

Myth #1: Immigrants pay additional fees because of their status.

FALSE. Newcomers to Canada pay the same fees as permanent Canadian residents. Like any other buyer, they need to pay for a home inspection, notary fees and transfer fees (also known as the welcome tax in honour of its creator, Minister Jean Bienvenue, whose last name means ‘welcome’ in English).

Myth #2: Immigrants need to have a large down payment.

FALSE. A 5% down payment is all you need to buy a home. However, you’ll need to take out mortgage insurance through the Canada Mortgage and Housing Corporation (CMHC). The premium is based on the amount of your down payment.

Eligibility

To be eligible for a mortgage, new immigrants need enough savings and proof of stable employment, just like any other Canadian. But they also need to provide certain documents, which vary depending on the down payment.

Down payment of 10% or less of the home’s purchase price

• Letter of reference from a recognized Canadian financial institution

OR

• 6 months of bank statements from their primary bank account

Down payment of over 10% of the home’s purchase price

• International credit report demonstrating an impeccable credit profile

OR

• Two other sources of credit demonstrating timely payments for the past 12 months:
  • Letter from your landlord and bank statements confirming rental payments
  • Letter from a creditor or bank statements showing bill payments (Hydro-Québec, telephone, car insurance)

Helpful tips

Want to show a financial institution that you’re trustworthy and able to repay a mortgage? Here are a few tips:

1. Open a bank account and use it regularly.
2. Pay all your bills on time.
3. Apply for small loans from your financial institution. That will help you show you’re able to pay off your debts on time.
4. Get a credit card. Use it often and pay it off in full before the due date.
5. Demonstrate stability by staying with the same employer for a long time.

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