Canada and Kitchener-Waterloo in particular are great places to live. So great in fact that we are a preferred destination for new Canadians looking for a safe and comfortable place to settle down, raise a family and prosper. Numerous times over the past couple of months I have received messages from these new Canadians asking the question how can I buy a house in Canada? Being a helpful sort of a guy I thought I would find out and share what I have learned. Please continue reading if you are relocating to Canada and want to buy a home.
For the purposes of buying a home new Canadians are split into two groups. Newcomers to Canada and Non-Permanent Residents of Canada. Newcomers to Canada are individuals that have chosen to immigrate to Canada and become permanent residents. Non-Permanent Residents as the title suggests are those that have chosen to immigrate to Canada as a transfer with an employer or another shorter term purpose. Each of these types of individual will qualify for different programs that I will describe in the following paragraphs. These programs are made possible by Mortgage Insurance Programs offered by Genworth Financial and the Canadian Mortgage and Housing Corporation so an insurance premium does apply. If you are a Diplomat or other foreign political entity I’m sorry but you are out of luck!
Let’s start with newcomers to Canada. Newcomers can qualify for a home purchase or refinance of a currently owned home. The property can be one or two units provided that the borrower occupies one unit as their principal residence. The property purchased can be new construction or a resale home. The maximum loan to value ratio for newcomers to Canada is 95%, you can buy a home with 5% of the purchase price as a down payment.
Now we come to non-permanent residents of Canada. Non-permanent residents can qualify for a home purchase only. The property can be one or two units provided that the borrower occupies one unit as their principal residence. The property purchased can be new construction or a resale home. The maximum loan to value ratio for non permanent residents of Canada is 90%, you can buy a home with 10% of the purchase price as a down payment.
As with any mortgage there are certain credit worthiness and down payment requirements that must be met to qualify and these vary depending upon the down payment available to the buyer. These conditions can include some or all of the following an international credit reports, letters of reference, bank statements and in some cases a Canadian family member to act as your guarantor. Your downpayment also must meet certain requirements. The minimum 5% downpayment must come from your own resources, for a larger downpayment a portion can come from a relocation subsidy or your guarantor. It is also required that the residence or primary residence in a two unit property is occupied by the borrowers and that all applicants qualifying for the mortgage reside at the property. Your maximum mortgage amortization is 25 years.
We have talked about the resources required and programs available for new Canadians to purchase their home, it is time to talk about the requirements for borrower qualification for a mortgage. The primary applicant must be employed full time at an established company and for a minimum of three months unless they are relocating under a corporate relocation plan in which case the three month requirement is waived. Applicants are also required to have a valid work visa or to have obtained landed immigrant status. The applicant must have relocated or immigrated to Canada within the past 60 months. Any debts or mortgages in the county of residence prior to Canada must be disclosed as must any rental income. These amounts combined with the property purchased in Canada must satisfy an gross debt service ratio of 35% or 42% including heating costs.
Supporting documentation for all of the above is required, so be prepared!
So that is a short guide for those relocating to Canada on how they can buy a home. I do hope that you have found this information helpful.
Please get in touch with any comments or questions by email at firstname.lastname@example.org or call my direct line at 519-590-6118.
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