For many who are new to Canada, homeownership is the ultimate goal goal. It enables families to literally and symbolically set down roots in Canada. Are you a newcomer to Canada or know someone who is? Here are some things you can do to start planning the purchase of your first home in Canada.
Eligibility
The “New to Canada Program” this allows you the opportunity to purchase a home in Canada.
- Available for permanent residents that have been in Canada for three years or less
- Also available to temporary residents such as international students and foreign workers
- Borrowers must have a minimum of 3 months full-time employment in Canada (those transferred under a corporate relocation program are exempt)
- Borrowers can purchase a home with as little as 5% down payment
Create your action plan
When it comes to buying their first home in Canada, newcomers should prioritize these two areas right from the start:
- Building Canadian credit history
- Saving for a down payment
Additional steps in the homebuying action plan include:
- Researching communities
- Assembling your team (mortgage professional, real estate agent, etc.)
Build Canadian credit history
To be approved for a mortgage in Canada, lenders will look at an applicant’s financial situation and credit history. This helps them determine whether or not the applicant is a trustworthy borrower. This is why it is important to establish a financial record and credit history in Canada. Here is what we reccomend:
Open a bank account. This is where you should deposit your pay cheques. Use this bank account to pay your rent, utilities, and other expenses. Unlike cash transactions, these steps build your Canadian financial records and proves a history of financial responsibility.
Keep your paperwork. When applying for a mortgage, you will need to show a lot of paperwork. Save your paystubs, utility bills, and bank statements in a binder so you have them all in one place.
Get a credit card. Apply for a Canadian credit card as it will help build your credit history. Always pay your card balance or at least the minimum payment each month. Try and limit your credit card spending to 50% of your available balance or less.
Save for a down payment
The minimum down payment needed for a home in Canada depends on the purchase price of the home.
| Purchase price of your home | Minimum amount of down payment |
|---|---|
| $500,000 or less | 5% of the purchase price |
| $500,000 to $999,999 | 5% of the first $500,000 of the purchase price10% for the portion of the purchase price above $500,000 |
| $1 million or more | 20% of the purchase price |
For a down payment of less than 20%, you will require mortgage default insurance which is added on to your mortgage amount.
Saving can be a challenge for anyone, let alone a family looking to start fresh in a new country. It is important to set your budget and stick to it to help your bank account (and down payment) grow!
Research communities
Researching different communities and neighbourhoods will help you find one that feels comfortable for your family. Home prices vary greatly from community to community so your research will involve determining which areas are both desirable and affordable for you.
Start researching close to where you rent and ask people you know about what neighbourhoods they would recommend. Exploring these communities is a great way to get to know them.
Assemble your team
Once you’re ready to begin the process, put together your team of real estate professionals. Start with a mortgage expert from Valko Financial to get a gauge on your options and how much you can afford. Your team of pros will most likely include a real estate agent, lawyer, home inspector, and appraiser.
We have a trusted group of partners that we have funded thousands of mortgages with. Ask us about any recommendations to assemble your team.
