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New To Canada & Wish To Buy Your First Home?

Buying a home is a huge milestone for newcomers to Canada. And it’s likely that a mortgage will play a role in you buying your first home. But there are a lot of moving parts to manage when applying for your mortgage. So, we’re sharing some key information about getting a mortgage as a newcomer to Canada to help you make sense of the journey ahead.


Getting a mortgage is seen as a rite of passage for many newcomers to Canada.


For those of you looking to get a mortgage as a newcomer to Canada, there are three distinct phases in your mortgage journey

1: Preparing to get a mortgage. 

2: Finding a lender experienced with newcomers. 

3: Applying for (and receiving) your mortgage. 


Before You Apply For A Mortgage

Preparing to get your mortgage is a process that can take some time as a newcomer to Canada. But, it will all be worth it once you get the keys to your new home. 

Here’s what you need to do before you can get a mortgage in Canada: 

  • Establish credit history: you will generally need to have a good credit history before you can get a mortgage in Canada. This shows Canadian lenders that you are a responsible borrower. 
  • Save for a down payment: a down payment is an amount of money that you pay upfront to buy a home. Generally, you will need to save between 5% and 35% of the home’s purchase price as a down payment. 
  • Save around 1.5% of the home’s purchase price for closing costs. This percentage is a rule of thumb to estimate the closing costs for the home, which includes things like land-transfer tax, home inspection, appraisal fees, legal fees, title insurance, and moving costs.
  • Gather your documents. You will need to provide a range of documents to buy a home in Canada, including tax returns, bank statements, a letter from your employer to confirm your employment, pay stubs, debt information, and rental history. You might need additional documents, depending on your situation. 
  • File your taxes. You will need to be up-to-date with your personal income taxes with CRA to apply for a mortgage in Canada. 
  • Consider how your goals and risk tolerance might impact your mortgage. Mortgages are quite customizable, you can choose different amortization schedules (which refers to the actual number of years (mortgage length) it will take to repay a mortgage loan in full ), interest rate arrangements (fixed or variable), and down payments.

Find A Mortgage Specialist Experienced With Newcomers

Many newcomers to Canada may not be able to meet standard mortgage qualification criteria due lack of an established credit history, limited employment history, temporary residency status, or other factors.
As such, it is important to find a lender experienced with a newcomer’s unique circumstances to guide you through your mortgage journey. Working with a broker that offers specialty mortgage qualification programs for newcomers is beneficial in helping you along the mortgage qualification process to reach your homeownership goals.


Applying For A Mortgage

The first step in your mortgage application is usually to get mortgage pre-approval. A mortgage pre-approval means that the lender has pre-qualified you for a certain loan amount based on your current financial situation and typically has locked in an interest rate. This process can be straightforward if you have all your documents and information ready to go. 

With your pre-approval in hand and a lender you trust on your side, it’s time to put in an offer on the home you’re interested in purchasing in Canada, and then start the final mortgage application process if that offer is accepted. 

If you’ve worked hard and thoughtfully during the pre-application process, this should run smoothly. It will be a matter of you submitting your documents to your mortgage agent to put together your application. This will then be sent for underwriting and processing. That said, a mortgage pre-approval does not guarantee you will get your mortgage. So it’s important to be responsive throughout the process if your lender has any follow-up queries. 


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