New to Canada Mortgage Guide: How Newcomers Can Buy a Home

# New to Canada Mortgage Guide: How Newcomers Can Buy a Home

Canada welcomes over 400,000 new permanent residents each year, and many arrive with homeownership as a top priority. The good news is that you do not need years of Canadian credit history to qualify for a mortgage. Dedicated newcomer programs exist at major banks and through CMHC-insured products that make buying a home possible within your first few years in the country.

Source: IRCC, 2024 Annual Report to Parliament on Immigration

At The Mortgage World, we have helped hundreds of newcomers navigate the Canadian mortgage system. This guide covers everything from program eligibility to the documents you will need.

Mortgage Eligibility by Immigration Status

Your immigration status determines which mortgage programs are available to you.

Source: CMHC, Newcomer Homebuying Guide, 2024

Permanent residents and work permit holders have the most options. If you hold a valid work permit with at least one year remaining, most major lenders will consider your application through their newcomer streams.

To explore your specific options based on your status, visit our new to Canada mortgage page.

Newcomer Mortgage Programs at Major Banks

Most of Canada's Big Five banks (and several other lenders) offer dedicated newcomer programs with relaxed requirements. Here is what they typically offer.

Common features of newcomer mortgage programs:

• No Canadian credit history required (within the first 5 years of landing)
• Down payment as low as 5% for purchases under $500,000
• Standard mortgage insurance through CMHC, Sagen, or Canada Guaranty
• Acceptance of international credit reports in some cases
• Employment letter from a Canadian employer is typically sufficient for income verification

Key differences between programs:

The eligibility window matters. Most banks define a "newcomer" as someone who has been a permanent resident or work permit holder for less than five years. After that, you are expected to have established Canadian credit and will be assessed under standard guidelines.

Down Payment Requirements for Newcomers

Newcomer programs follow the same CMHC-insured minimums as other Canadian buyers.

Source: CMHC, Homebuying Step by Step, 2024

Your down payment must come from a verifiable source. Acceptable sources include savings from your home country, a gift from an immediate family member, or funds earned in Canada. You will need to provide documentation showing the source and a paper trail of the funds entering Canada (such as bank transfer records).

No Canadian Credit History? No Problem

This is the single biggest concern newcomers have, and it is the easiest to address.

Newcomer mortgage programs were specifically designed for applicants without Canadian credit. Instead of a credit score, lenders will look at:

• Employment stability: A full-time job in Canada with a letter from your employer
• International credit history: Some lenders accept credit reports from your home country, transferred through services like TransUnion's international credit report
• Rental payment history: Proof that you have been paying rent on time in Canada
• Down payment size: A larger down payment reduces the lender's risk

If you want to build Canadian credit quickly, get a secured credit card within your first month of arrival. Use it for small purchases and pay the balance in full each month. Within six months, you will start establishing a credit profile.

Getting pre-approved before you start house hunting is strongly recommended. Our mortgage pre-approval guide walks you through the process step by step.

International Credit Transfer Options

Some lenders now accept international credit data to supplement your Canadian application.

How it works:

1. TransUnion partners with credit bureaus in select countries to provide an international credit report
2. Your broker submits a request for your international credit file alongside your Canadian application
3. The lender reviews both files when assessing your application
4. A strong international credit history can offset the lack of Canadian credit

Countries with TransUnion international credit transfer:

Currently available from select countries including India, the Philippines, Mexico, South Korea, and several others. The list expands regularly. Ask your broker whether your home country is eligible.

This is not required for newcomer program approval, but it can strengthen your application and potentially give you access to better rates.

Proof of Income Alternatives for Newcomers

Standard income verification requires a T4 and Notice of Assessment. Newcomers who have not yet filed a Canadian tax return need alternatives.

Acceptable income documentation for newcomers:

If you are self-employed, your options are more limited in the newcomer stream. Most newcomer programs are designed for salaried employees. Self-employed newcomers may need to explore B-lender or alternative lending options.

Foreign Buyer Ban Exemptions

The Prohibition on the Purchase of Residential Property by Non-Canadians Act (effective January 2023, extended to January 2027) restricts property purchases by foreign nationals. However, significant exemptions apply.

Who is exempt from the foreign buyer ban:

• Permanent residents - fully exempt, treated the same as Canadian citizens
• Work permit holders - exempt if the permit is valid for at least 183 days and they have not purchased more than one residential property
• Refugees and protected persons - exempt
• International students - exempt under certain conditions (enrolled for a specified period, property under a certain value threshold)

Source: IRCC, Prohibition on the Purchase of Residential Property by Non-Canadians Act, 2023 (amended 2024)

If you are a permanent resident or qualifying work permit holder, the foreign buyer ban does not apply to you. You have every right to purchase residential property in Canada.

Documents You Will Need

Prepare the following documents before meeting with your broker.

Identity and immigration status:

• Valid passport
• Confirmation of Permanent Residence (COPR) or work permit
• Social Insurance Number (SIN)
• PR card (if already received)

Income and employment:

• Employment letter (dated within 30 days)
• Recent pay stubs (3 months)
• Employment contract (if newly hired)

Financial documents:

• Bank statements showing down payment funds (3 months)
• Proof of source of down payment (wire transfer records, gift letter)
• Any existing debts (car loans, student loans, credit cards)

Property documents (once you have an accepted offer):

• Agreement of Purchase and Sale
• MLS listing details
• Property tax information

Having these documents ready before you start house hunting will speed up the pre-approval process significantly.

Working with a Mortgage Broker as a Newcomer

A mortgage broker is especially valuable for newcomers because they have access to multiple lenders and can match your specific situation to the right program.

Why a broker matters for newcomers:

• Banks only offer their own products. A broker compares programs across dozens of lenders
• Brokers know which lenders have the best newcomer programs for your specific immigration status
• A broker can help with international credit transfer requests
• Broker services are typically free to the borrower (the lender pays the broker's commission)

At The Mortgage World, we specialise in newcomer mortgages and have established relationships with lenders who offer the most competitive newcomer programs. We will walk you through every step, from pre-approval to closing.

Next Steps for Newcomers

1. Gather your documents - Start collecting the identity, income, and financial documents listed above
2. Get pre-approved - This tells you exactly how much you can afford and shows sellers you are a serious buyer
3. Open a Canadian bank account - If you have not already, this is essential for the mortgage process
4. Start building credit - Get a secured credit card and use it responsibly
5. Connect with a broker - Get expert guidance tailored to your immigration status and financial situation

Start your newcomer mortgage pre-approval or learn about our pre-approval process.

References

• IRCC - Immigration and Citizenship: https://www.canada.ca/en/immigration-refugees-citizenship.html
• CMHC - Newcomer Homebuying Resources: https://www.cmhc-schl.gc.ca/consumers/home-buying/newcomers
• Prohibition on the Purchase of Residential Property by Non-Canadians Act: https://laws-lois.justice.gc.ca/eng/acts/P-25.2/
• TransUnion - International Credit Reports: https://www.transunion.ca/