New to Canada.

If you are already a Permanent Resident or have received confirmation of Permanent Resident Status, you are eligible for a typical mortgage with a 5% down payment – assuming you have good credit.

Some additional criteria for qualifying includes:

• Must have immigrated or relocated to Canada within the last 60 months
• Must have a valid work permit or obtained permanent residency
• All debts held outside of the country must be included in the Total Debt Servicing Ratio (GDS/TDS)
  • Rental income earned outside of Canada is excluded from the GDS/TDS calculation
• Guarantors are not permitted
• Owner-occupied properties if putting less than 20% down payment

For Permanent Residents with limited credit, or individuals who have not yet qualified for Permanent Residency, there are still options! In fact, there are several ‘New to Canada’ mortgage programs through CMHC, Sagen™ and Canada Guaranty Mortgage Insurance, which cater to this group of homebuyers.

New to Canada Programs

To qualify for these New to Canada programs, you must have immigrated or relocated to Canada within the last 60 months and have had three months minimum full-time employment in Canada.

For individuals looking for 90% credit, a letter of reference from a recognized financial institution OR six (6) months of bank statements from a primary account will be required.

If you are seeking credit of 90.01% to 95%, you will need to produce an international credit report (Equifax or Transunion) demonstrating a strong credit profile OR two alternative sources of credit demonstrating timely payments (no arrears) for the past 12 months. The alternative sources must include rental payment history and another alternative, such as hydro/utilities, telephone, cable, cell phone or auto insurance. 

Another option for New to Canada residents, depending on your residency status and credit history, are alternative lenders such as B-Lenders and MICs (Mortgage Investment Corporation). It is important to note that alternative lenders will require a down payment of 20%.

Alternative lenders cater to individuals which lack a strong credit history, or a guaranteed income (recent immigrants, or the self-employed, for instance). As a result, these lenders generally have lower entry qualifications, which are offset by higher interest rates. 

Why is Alternative Lending Necessary?

• CRA arrears 
• Income issues such as non-traditional income as with self-employed borrowers
• Credit issues such as low credit score, credit arrears, current mortgage or even bankruptcies 
• Unexpected liens on title 
• Foreclosure situations 
• Unique financing needs/opportunities

If you do not qualify for the New to Canada programs, or a standard mortgage, reach out to a DLC Mortgage Professional and they can help you navigate the alternative options! 

Using a mortgage professional will help to ensure you understand your options and they can help you determine the best program and mortgage choice for you. Before you talk with a mortgage professional, there are a few things you need to know when it comes to submitting an application – and getting approved – for your first mortgage in Canada:

Supporting Documents! 

If you’re new to the country and have weak credit, supporting documents will come in handy. These may include: proof of income, proof of 12 months’ worth of rental payments or letter from landlord, documented savings, bank statements and/or letter of reference from a recognized financial institution. These documents all paint the picture of whether or not you are a safe investment for a lender.

Build your Credit Rating!

This is one of the most important aspects to getting a mortgage as credit rating determines your reliability as a borrower and will determine your down payment rate. One of the best ways to build your credit is by getting a credit card that you use and pay off each month. Paying other bills such as utilities, cell phones and rent can also contribute to your credit score and reliability.

Start Saving! 

One of the most expensive aspects of home ownership is the down payment, which is an upfront cost and one that is vital to securing your future. As mentioned, the down payment can be as little as 5% to 10% depending on your status. However, if you’re paying $500,000 or more for your home, the minimum down payment will be 5% for the first $500,000 and 10% of any amount over $500,000 – regardless of your residency status.

Choose a Mortgage Provider! 

Once you are ready to get your mortgage, it is best to contact a DLC Mortgage Professional who can help you determine the best mortgage solution to suit your needs. They may even be able to find you some extra savings!