Canadian mortgage for a US Citizen

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US Citizen - Canada mortgage


Bruce Schoenne, AACI, P.App
Nov 22, 2007 - 9:43:00 PM
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Can a US Citizen obtain a mortgage to purchase a home or property in Canada?

Not surprising, we have had a number of inquiries from US Citizens about this exact question.

The biggest concern is their ability to obtaining financing given their US Citizenship and the fact that the home or property is located in Canada. These types of inquiries are not just limited to US Citizens, in fact, we have also had several inquiries from Europe. In all cases, the answer is essentially the same.

“YES”… US Citizens and Non Residents living overseas can obtain financing for a home or property purchased in Canada…



As a Non Canadian  Resident, how much can I borrow?

Canadian lending institutions will typically lend up to 65% (loan to value ratio of 65%) of the purchase price or appraised value, which ever is lower, without high ratio insurance.

As an example, a US Citizen purchasing a property in Canada for $100,000 will have the ability to borrow $65,000 ($100,000 x .65). In special cases, and with a strong personal covenant, some exceptions to a 75% loan to value ratio can be made.

New to Canada and Canadian residents have access to mortgage loan insurance, which gives them the ability to obtain financing of up to 97%, unfortunately it is not available to Non-Residents.

What are the income qualifications requirements for Non Canadian Residents?

Income qualifications for US Citizens and Citizens from Overseas are the same, as those required by Canadian Citizens.

In order to qualify for a mortgage for a home or property purchased in Canada, your Gross Debt Service Ratio cannot exceed 35% and your Total Debt Service Ratio cannot exceed 42%.

What are the reporting requirements for Non Canadian Residents?

Similar to requirements for Canadian Citizens, you will be required to provide a full mortgage application, proof of income and down payment. Financial institutions will also request a credit report from your country of origin.

As a Non Resident, what type of interest rate can I expect to pay?

Mortgage interest rates for Non Residents should be no different than those that are available to Canadians.

What length of amortization period can I expect?

It also possible for Non Residents to obtain a mortgage with a 25 year amortization period. A 25 year amortization period is typically the maximum length for an amortization period in Canada, although several financial institutions are now offering up to 40 year amortization periods.

As a note, a mortgage with a 40 year amortization period will typically be subject to a higher premium.

 


Purchasing a home or property in Canada by a US or Overseas Citizen does not have to be a complicated process. It’s important to choose a mortgage specialist that has the knowledge and expertise to find a mortgage product which best suits your needs. It pays to use the services of a mortgage broker.

Whether your purchasing a new home, refinancing your existing home, or looking to switch your existing mortgage for a better rate, we would love the opportunity to impress you. Remember, there is no cost or obligation.

 


Apply Today!

 

 

Question..

If I become a landed immigrant, will this change my qualification requirements?

Answer..

As a landed immigrant, you would qualify the same as if you were a Canadian Citizen.

You will however be required to have established some type of credit in Canada in order to qualify for financing. If you don't have any credit established in Canada, lenders would have to fall back on your credit history from your country of origin and lower the loan to value ratio to 65%.

Question..

I am a Canadian presently residing in New York.  I wish to purchase a property in Canada.  Given that I meet all financial requirements, am I eligible for mortgage loan insurance? I have Canadian Institution bank accounts, line of credits and credit cards which are still active and valid.

Answer..

CMHC (mortgage loan insurance) requires that you earn your income from a Canadian company and declare that income in Canada if you are living out of the country.  So if you have filed taxes in Canada the last couple years we can look at putting a mortgage together for you otherwise you would be limited to a mortgage of 65% of the purchase price.

Questions? Talk to one of our Mortgage Specialists today. 

 



Suggested resources:

Mortgage Glossary – Don’t understand some of the terms used in these articles? Our mortgage glossary provides simple definitions.

 

Canadian Mortgage Calculator - Calculate mortgage payments, amortization schedules, interest costs and more. The more you play with it, the more you’ll see what it can do.

GDS and TDS – Understanding your GDS and TDS is an important part of your borrowing ability.

Credit repair 101 - Tips on how to repair not so good credit.


LendingMax - Mortgage solutions for Canadians.

 


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