Buying a Home as a Newcomer to Canada

Buying a home in Ottawa as a newcomer to Canada is very possible — every major lender has dedicated newcomer programs — but it requires more documentation and forward planning than a domestic purchase.

Mortgage options for newcomers. Permanent residents can typically access standard mortgage products from day one, qualifying with normal income verification. Work-permit holders can access standard products with most major lenders provided they have at least 12 months remaining on their permit and a Canadian employment letter. Buyers with less than 35% down generally need to be PRs or work-permit holders; cash buyers and 35%+ down buyers have additional options including some private and B-lender programs.

Credit history is the biggest hurdle. Lenders need to assess creditworthiness, and a brand-new arrival typically has no Canadian credit score. Acceptable workarounds: an international credit report (Equifax or TransUnion can pull from many countries — your broker arranges), 12 months of bank statements from your home country showing consistent income and no overdrafts, a letter from your previous landlord confirming on-time rent for at least 12 months, and proof of any utilities or telecom accounts in good standing. Open a Canadian credit card and a Canadian chequing account the moment you arrive — the sooner Canadian credit history starts, the better.

Down payment sourcing matters. Lenders need to trace your down payment funds for 90 days. Funds sitting in your Canadian account for 90+ days are clean. Funds transferred from overseas need wire transfer records showing the foreign source, plus bank statements from the originating account demonstrating the funds were yours. Gifted funds from family abroad work but need a gift letter and the same paper trail; some lenders prefer the gift to land in your account 30+ days before mortgage application.

Non-resident considerations. If you don't hold PR or a work permit and aren't a Canadian citizen, the federal Prohibition on the Purchase of Residential Property by Non-Canadians Act currently restricts most residential purchases through to its current sunset date — check current status with a real estate lawyer before assuming you qualify. Even when buying is permitted, Ontario's 25% Non-Resident Speculation Tax (NRST) applies to residential purchases in addition to land transfer tax.

Most important step: connect with a mortgage broker who has done multiple newcomer files. Bank branch staff sometimes give incorrect or out-of-date answers; experienced brokers know which lender takes which form of international credit and how to structure the application.

More from the journal:

• How much home you can really afford
• Pre-approval vs pre-qualification
• Where to start when buying in Ottawa

Trusted outside sources:

• CMHC: Newcomers to Canada
• Government of Canada — Settle in Canada