Once you have settled into Canadian day to day living and have achieved a permanent role at your job, the next thing most immigrants aspire for is owning a home. This became of higher importance since the price of rent equates to a mortgage payment these days.

Here are a few things you should know to prepare for your home purchase.

RESIDENCY

To qualify, you must have any of the following status:

  1. Permanent Residents
  2. Temporary Residents with a valid work permit issued for at least a year and is valid for at least 6 months after closing
  3. Refugees
  4. Non-resident Canadians married to a Canadian Citizen or a Permanent Resident holder
  5. Non-resident Canadians with a registered common law status with a Canadian Citizen or a Permanent Resident Holder

INCOME

All applicants must not be on probation and have been working for a minimum of three months at their employment. Standard income qualification policies apply. Self-employed individuals must have 2 years of income filed in Canada and the same income averaged will be used to qualify.

DOWN PAYMENT

Applicants must provide sufficient proof that they have enough down payment. You can choose to pay a minimum down payment of 5% for purchase prices under $500,000.00 and any dollar amount over 500,000.00 will be qualified at 10% down payment.

If you choose to pay between the minimum down payment up to 19.99% of the purchase price, you will be qualified under an insured mortgage application. This means that mortgage insurance will be added to your mortgage amount, and it will be included in your monthly mortgage payments. This is a precautionary measure set-up by the Canadian Government to minimize risks on potential mortgage default. You will also get a maximum of 25 years amortization.

If you choose to pay 20% down payment and more, your application will be considered an uninsured application where the guidelines for qualification is a little more relaxed and your amortization is lengthened to 30 years, thereby decreasing your monthly mortgage payments. A mortgage default insurance is not required at 20% down payment.

Acceptable sources of down payment

Gifted funds are acceptable for down payment as long as closing costs which makes up of 1.5% of your purchase price come from own resources. The down payment must be in a Canadian account a minimum of 30 days before closing however, any large deposits into your Canadian account within 90 days prior to when your deposit was given will need to be traced. If your down payment funds came from an overseas account, we will need 90 days history of that bank account prior to the withdrawal and trace any further large deposits in your foreign account if any. You can also use RRSP’s, FHSA’s and other mutual funds for down payment. 

CREDIT

If you are paying minimum down payment up to 9.99%, we will need proof of credit. In most cases, your credit may not be established, meaning you don’t have two trade lines opened for a minimum of 2 years. In this case, we will require 12 months bank statements exhibiting good repayment history of rent and 12 months good repayment history of a utility bill (phone, internet, cable etc.) If you don’t have these, we can also provide a foreign credit report from your home country to provide repayment history. If this is not available as well, some insurers will take 12 months bank statements confirming you had no derogatory transactions over the last 12 months.

It gets easier with 10% down and more. Lenders will only require a letter of good standing from your Canadian bank confirming you have opened your account for a minimum of 6 months and have maintained satisfactory deposits with no derogatory transactions.

Buying your home is a challenging but rewarding experience. It could also be made easier if you have an experienced broker right by your side. With over 20 years of experience, we can provide you with the best advice and solutions to achieve your goal of homeownership.

Contact us today!