If you're new to Canada and want to buy a home here, there are some rules you will need to follow. First off, the good news is that the Canadian government does not restrict foreign ownership of real estate, so you can buy property here even if you're a temporary (or permanent) resident, rather than a citizen. Some provinces do limit the amount of agricultural land foreigners can buy, but this won't apply to most home buyers.
However, foreign banks cannot register mortgages in Canada, which means you'll need to get a mortgage from a Canadian bank if you plan to finance the property. The underwriting process for a newcomer can be a bit more complicated than it would be for a citizen, but I've seen people qualify for a mortgage only a few months after arriving in Canada.
If you want to buy a home as a transplant to Canada, here's what you need to know:
- Down payments: Depending on the lender, you may need a larger down payment because you could be perceived to be a higher credit risk. Some lenders require newcomers to put down at least 35 per cent, but there are alternative options for newcomers. You may be required to have had a down payment in Canada for at least 30 to 90 days depending on the lender, but some exceptions can be made depending on the country where the down payment is coming from and whether or not those funds can be traced. Lenders may also require that newcomers who are putting down less than 35 per cent purchase mortgage loan insurance because the risk of default is higher among non-citizens.
- Employment and credit history: If you're brand new to Canada, you probably haven't had much time to establish a long credit or employment history here. Some banks will accept a 35 per cent down payment for those who have been in Canada for less than five years and have yet to establish employment sufficient for the mortgage they are seeking. Under other programs, the lender may require you to wait until you've worked with a Canadian employer for at least three months or you may need to provide extra documentation to show that you're creditworthy. This might include immigration documentation such as a work permit, references from banks or employers, credit reports from your home country, records showing 12 months of on-time rent payments and proof of funds for your down payment. If you're working for the same company because they've relocated you to Canada, that may help demonstrate your stability and creditworthiness to lenders.
Property Transfer Tax: Property transfer taxes may work differently than in your home country, so make sure you do your homework and budget accordingly. The main thing to note is that if you are buying a home in Metro Vancouver, you will have to pay not only the basic provincial Property Transfer Tax that all homes are subject to, but also an additional foreign-buyer Property Transfer Tax of 15 per cent of the purchase price. That applies whether you are resident in Canada or still living overseas, to those who do not have Canadian citizenship or permanent residency. However, if you are a foreign national living in Metro Vancouver with a Canadian work permit, you will be exempt from this extra tax. And the tax only applies to Metro Vancouver, as of late 2016, so if you're buying outside that region, there is no additional tax for foreign nationals.
If you are exempt from the foreign buyer tax, British Columbia also offers first-time home buyers an exemption from the basic Property Transfer Tax. But again, you must be a Canadian citizen or permanent resident (not on a work permit) to qualify and you cannot have purchased property or been on the title of a property anywhere in the world at any time. The exemption also requires you to have either lived in BC for 12 consecutive months before the date you register the property or have filed income taxes as a BC resident for at least two out of the last six years.