Newcomers to Canada

Who the programs are for

Newcomer programs generally apply to people who have been in Canada for up to five years. Permanent residents have the widest choice of lenders. Work permit holders also qualify at many lenders, typically with a permit that still has a reasonable amount of time left on it.

The common thread is employment. Lenders want to see that you are working in Canada, with a letter of employment and recent pay stubs, or a signed offer with a start date if you have just arrived.

Credit when you have no Canadian file

Instead of a Canadian credit score, lenders accept substitutes. An international credit report from your home country works at many institutions. So does a reference letter from your previous bank, or twelve months of clean rent and utility payment records.

Start building a Canadian file the week you arrive. A secured credit card used lightly and paid in full each month produces a usable score in about six to twelve months, and that score widens your options considerably.

• International credit bureau report
• Letter of reference from a foreign bank
• Twelve months of rent receipts or bank drafts
• Twelve months of utility or phone payment history

Down payment and proof of funds

Permanent residents can buy with as little as 5% down on an owner-occupied home under the standard insured rules. Work permit holders are often asked for a larger down payment, commonly around 10% or more, depending on the lender.

Money brought from abroad needs a clear paper trail: the source account, the transfer record and the arrival in your Canadian account. Start that documentation before you make an offer, because tracing a wire under a two-week financing condition is stressful and sometimes impossible.

Rules that catch newcomers out

Canada restricts home purchases by some non-Canadians, with exemptions that include permanent residents and certain work permit holders and students. Status and timing decide whether the restriction applies to you, and it is worth confirming before you shop.

Ontario also charges additional land transfer tax to certain foreign buyers on residential purchases. Permanent residents and Canadian citizens are not subject to it, and some newcomers qualify for a rebate after obtaining permanent residence. We flag this early so the closing costs in your plan are the real ones.