Newcomers To Canada

Canada welcomes thousands of temporary and permanent residents from across the world every year. According to the Canadian government’s Immigration Refugees and Citizenship Canada (IRCC) department, in 2019, Alberta saw 43,690 people become permanent residents of Canada. Out of that number, 19,625 were living in Calgary.

Whether permanent or temporary, newcomers to Canada face a variety of challenging opportunities. One of these is becoming a homeowner. As a newcomer to Canada, buying your first home can seem complicated, but the process becomes easier to manage with the right knowledge and preparation.

Getting Started

The first consideration newcomers should make is what kind of home they are looking for. Now is the time to pinpoint which neighbourhoods you would like to live in. Do you want to be close to the office to save time on your morning commute? Are you looking to be near schools? Do you want to be near restaurants and businesses or live in a more residential area?

Also, consider what features you’re looking for in your home. What size of home are you looking for? Do you want yard space? What number of bedrooms and bathrooms do you need?

These considerations will help you understand where you should be house hunting and what you’re looking for in your future home.

The Canada Mortgage and Housing Corporation’s (CMHC) website has helpful information, checklists, and worksheets available in eight languages (English, French, Mandarin/Simplified Chinese, Punjabi, Urdu, Tagalog, Arabic and Spanish) to help newcomers on their homebuying journeys.

newcomers mortgage

Determine How Much Can You Afford

You need to determine how much money you have saved for a down payment and closing costs. You also need to consider how much you can afford per month on mortgage payments and property taxes. This is where a local mortgage broker can help you. You should connect with them and complete a mortgage application before meeting with a realtor. The application tells the mortgage broker important information like your arrival date in Canada and what credit you have built here.

Down Payment Considerations

Showing that you have the money to put a downpayment on the house is an essential part of the process. Having three months of bank statements from a Canadian bank or institution is vital for lenders to see. If the money for your down payment is coming from another country, your mortgage broker can help you get documents you need to show where that money came from. If you have a bank account in another country, you can get bank statements from there. You will also need to have documents that show how that money was transferred to you in Canada and what the conversion rates are.

Proving Creditworthiness

Residents, both temporary and permanent, will need to meet certain requirements to purchase a home. The following criteria must be completed to prove your creditworthiness and are related to putting 5% down on your new home.

  • You need to show at least three months of employment history. This can be done with a letter of employment and pay stubs. There must also be at least 12 months of consistent utility payments and 12 months of consistent payments to other things like a cellphone or cable bill. There shouldn’t be any late payments or debts for these payments.
  • You also need to supply a letter from your landlord and supporting documents that at least 12 months of rent was paid on time. Depending on your residence status and how much your downpayment is, additional requirements need to be met.

If there are requirements that you don’t meet fully, your mortgage broker can help assess them and plan your next steps. For example, if you have 12 months of credit in another country, you can obtain documentation proving this credit. The document proving credit from another country is commonly referred to as a credit bureau. Your credit bureau can potentially be used to establish creditworthiness.

newcomers mortgage

Determine What Mortgage Is Right For You

In Canada, there are many kinds of mortgages and many different lenders. How long should your mortgage term be? Should you go with a variable or fixed rate? It can be confusing to determine which option is best for you when there are so many available. Your mortgage broker can help you out with this by explaining different types of mortgages, terms, and rates and helping you determine which one is right for you.

Getting pre-approved for a mortgage will tell you how much you can afford to spend on a home before you start looking.

When You’re Ready To Start Looking

When you’ve made all the preparations and have obtained a pre-approval, it is time to connect with a realtor and start looking for your future home. After finding your perfect home, make sure to get an appraisal and home inspection. Talk to your mortgage broker to find out the next steps to finalize your mortgage. You should also plan to obtain property insurance after the sale goes through.

If you are a newcomer to Canada and are interested in learning more about mortgage requirements and options, reach out to our team at the Mortgage Group Inc. Our brokers are always happy to help you find the best solution.