Newcomer Mortgage Guide
Your Next Step Towards Homeownership!
Introduce
Unless you are buying with all cash, getting a mortgage pre-approval is the first step of buying your first home in Canada! Immigrating to Canada means starting a new life and rebuilding your credit history, which can be problematic if you are trying to get a mortgage, that’s why many banks offer newcomer mortgage programs to help new immigrants settle down.
1. Can New Immigrants Get Mortgage in Toronto?
Quick answer, YES! It is a common misconception that new immigrants or newcomers can’t qualify for a mortgage from a large Canadian Bank like RBC, BMO, or TD, as ‘conventional’ mortgages often require the applicant to have local income and credit records. But in fact, many banks, including A Lender banks, have unique Newcomer Mortgage Programs that help thousands of newcomers settle every year. Let’s first discuss what is a newcomer mortgage.
2. What is a Newcomer Mortgage?
A newcomer mortgage is a specialty mortgage with a more lenient set of requirements for the applicants so even the newcomers who are starting a new life in Canada can buy a property they call home. Newcomer mortgage bypasses the two biggest barriers for newcomers in conventional mortgages:
- Proof of Income – for conventional mortgages, banks like to see if the applicant has a steady stream of local income for the past 2-years, typically in the form of employment income. Newcomer mortgage programs use a lower standard or alternative methods to measure applicants’ financial capabilities.
- Established Creditworthiness – conventional mortgage programs require the applicant to have a minimum credit score of 600, something many new immigrants don’t have as they need to rebuild their credit score from scratch. Newcomer mortgage programs would often waive this requirement for newcomers or find other means to measure their creditworthiness.
With these biggest obstacles out of the way, getting a mortgage as a newcomer is not far off as long as you meet other eligibility requirements.
3. Am I Eligible for a Newcomer Mortgage?
As amazing as newcomer mortgages sound, not everyone is eligible. Each lender has its own set of criteria, but there are some general guidelines they all follow:
1. Newcomer Status – you are identified as a newcomer if you became a Permanent Resident of Canada for less than 5 years. (Note: recently returned Canadian emigrants are sometimes qualified too)
2. Down Payment – 5% is the minimum down payment required for insured mortgages under $500K, but it is very difficult to obtain. With a lack of or supplemented credit record, 35% is the most common minimum down payment required.
3. Admissible Income – you must have some previously/currently/projected income stream to show to the lender.
4. The Maximum number of properties – you are only eligible for a maximum of 2 of such mortgages with most lenders.
4. Available Newcomer Mortgage Programs
We collected some general information on the currently available newcomer mortgage programs offered by the largest banks in Canada. Please note the information below was collected on June 30, 2022, from mortgage agents operating in GTA, it should only serve as a reference. We are not mortgage specialists and cannot guarantee the accuracy and completeness of the information. Please consult a mortgage specialist for the most up-to-date policy.
Too lazy to read it all? Watch this video and listen to our breakdown of which program is best for your situation: (insert YouTube video)
Now you know how to get a newcomer mortgage, check out this blog to learn what’s the next step: “First-time Home Buyer Guide”
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