If you’re a Canadian citizen, applying for a mortgage is a fairly simple process. However, individuals who have recently moved to the country and aren’t yet citizens can still get a mortgage. The process is just more complex and the documentation needed is more extensive.
There are a few factors that ultimately determine what kind of mortgage you’ll qualify for as a newcomer to Canada. These factors are:
Whether you’re a permanent resident
The size of your down payment
Your credit score
In essence, there are five different scenarios a newcomer can fall into when it comes to a mortgage application. Let’s take a look at them.
You’re a permanent resident, have a good credit score and have a down payment of 5% or more. This is the best-case scenario, because with these attributes you qualify for a regular mortgage, the same as any Canadian citizen.
You’re a permanent resident, you have the 5% or more down payment, but your credit score is weak. While not ideal, you still may qualify for the New to Canada Program offered by the three mortgage default insurance providers.
You’re not a permanent resident, but you’ve submitted your application and also have a valid work permit. In addition, you have a good credit score and a down payment of 5% or more. Once again, you qualify for a regular mortgage.
You’re not a permanent resident, but you have a 10% or more down payment (your credit score can be good/fair or weak). You qualify for the New to Canada Program.
You’re not a permanent resident and don’t have a down payment of at least 10%. This is the one scenario in which you won’t qualify for a mortgage.
What you need for the New to Canada Program
Some people who have recently moved to this country may not qualify for a regular mortgage, but may still be eligible under the New to Canada Program offered by the three mortgage insurers. In order to qualify for the New to Canada Program, you have to demonstrate that you have good credit. This can be achieved in a number of ways:
Consistently using and paying off a credit card in full
Making on-time payments for any loans
Paying all bills (such as cell phone and utility bills) on time