How to Buy a House in Canada

Most searching for “how to buy a home in Canada” are foreigners looking for mortgages or information on ownership laws. This article will be directed at this group, though some of the contents might also be helpful to Canadians, specifically those with non-citizen/resident friends or family looking to buy a home in Canada.

Purchasing a home in Canada is a little different than purchasing a home in the United States. In Canada, the rate of home ownership is about the same as it is in the US; however, the average home owner in Canada has 70 percent equity in their home, where in the US many find themselves with very little if any equity. This is challenging news for many who are first researching how to buy a home in Canada. The good news is that the process is not too difficult, as most Canadian Providences have no restrictions on foreign ownership. The bad news is that in order to purchase, you’ll need to make a large down payment.

When buying a home in Canada, Canadian banks generally require 25-35 percent down payment with the actual amount determined by resident status. It is not possible in most countries, including the United States, to get a mortgage loan on a foreign property, so for most the only option is to finance locally in Canada.

Canadian Immigration

Canada considers those who live in Canada less than six months per year a non-resident. A non-resident can purchase property and have a Canadian bank account. The challenge comes for those looking to stay in Canada more than six months per year. If this is the case you must apply for immigration status. The benefit of immigration status is your required down payment will likely be ten-percent less, however immigration might be a challenge for some.

Canadian Mortgage Terms

Canadian residents can typically finance 75 percent of the purchase price of a home which will be used as a primary residency, with the remaining 25 percent being a required down payment. Qualification and restrictions are for the most part the same as they are in the United States and other countries. For example, the down-payment must be cash coming from the purchaser’s bank account (not a gift), and the process involves interviews via phone, fax, e-mail to gather personal information such as assets/liabilities, employment and/or income information.

Applications for Canadian home financing are considered on a case by case basis, and approval generally takes 48-72 hours from the time that the application was submitted. Along with the application, required documents are generally income verification, tax returns, credit report, letters from the borrower’s personal bank showing all accounts are in good standing, down payment confirmation showing the funds have been in the applicants bank account for 3-6 months, two forms of ID. The Canadian home purchaser will need a Canadian lawyer or notary public to prepare the mortgage documents and registration at the Land Titles office.

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