Mortgages for newcomers in Canada

As a recent arrival, lenders don't have much history on you yet — no Canadian credit record, maybe only a few months of local income. They're cautious, not unwelcoming. The good news: most big lenders run dedicated newcomer programs that look at your savings, employment letter and foreign banking history instead of a Canadian credit score. Whether you're a permanent resident or on a work permit also shapes your options, with PRs usually getting the widest choice.

Minimum down payment is tiered by price: 5% on the first $500k, 10% on the portion between $500k and $1.5M, and 20% at $1.5M and above. On a $700k home that's $25k (5% of the first $500k) plus $20k (10% of the next $200k) = $45k. The insured price cap rose to $1.5M in December 2024, and first-time buyers and buyers of new builds can now choose a 30-year amortization to lower the monthly payment.

With less than 20% down your mortgage is "high-ratio" and you must carry mortgage default insurance. It protects the lender, not you, but it's what lets you buy with a small down payment. The premium is a percentage of the loan that rises as your down payment shrinks, and it's usually added onto the loan and paid off through your regular payments rather than upfront. CMHC is the best-known of the three insurers.

Before approving you, lenders run a "stress test": you must qualify at the greater of your contract rate plus 2% or a floor of 5.25%. So a 4.5% rate is tested at 6.5%. Two ratios also apply: GDS (housing costs — mortgage, taxes, heat) should stay at or below 39% of gross income, and TDS (housing plus all other debts) at or below 44%. They're a guardrail so the payment doesn't strain your life.

Before house-hunting, get a pre-approval: the lender reviews your income and documents and tells you roughly how much you can borrow. It's free and keeps your search inside your budget. A key perk is the rate hold — today's rate is usually locked for 90 to 120 days, so you're protected if rates climb and typically still benefit if they fall. Remember a pre-approval isn't the final guarantee; full approval comes once you've picked a home.

You likely have no Canadian credit history yet, so start building one now: get a credit card, make small purchases and pay the full balance on time — even a few months of clean payments helps. Newcomer programs also let you use foreign banking history. For the down payment, lenders verify where the money came from, usually a 90-day account history, plus a gift letter if someone gave it to you. Core documents are your status (PR or work permit), employment letter and pay stubs, ID and bank statements. The tidier your file, the faster it moves.

Canada offers several first-time-buyer supports. The FHSA lets you save with a tax deduction going in and tax-free withdrawal for a home. The Home Buyers' Plan (HBP) lets you borrow from your RRSP for the down payment and repay it gradually. On top of that, several provinces and cities — Ontario, British Columbia and the City of Toronto among them — offer land-transfer-tax rebates for first-time buyers. These can add up to thousands, so check which apply before you buy.

You can go straight to your bank or work with a mortgage broker. A bank offers only its own products, while a broker shops several lenders and compares rates for you — especially useful for newcomers, since some lenders are more comfortable with a newcomer file. Crucially, the broker is usually paid by the lender, not by you, so their help is free to the client. A free second opinion never hurts: look for a licensed broker and compare a few rates.