The rules for borrowing to buy property in Canada are a bit different for non-residents
Who can buy real estate in Canada?
Canada welcomes buyers from anywhere in the world, and there are no restrictions to the types of properties people can buy.
What is a non-resident?
It has nothing to do with citizenship.
Lenders define a non-resident as someone who does not earn an income here and who does not file taxes in Canada.
How much does a non-resident need for a down payment?
Lenders typically ask for a larger down payments from non-residents of Canada than they do from resident borrowers. Exactly how much more depends on a few factors. For example:
If you’re living in the United States, plan to use the property rather than rent it, and can provide proof of income and down payment, your down payment must be at least 20 per cent of the total purchase price.
Elsewhere in the world
If you’re living anywhere other than Canada or U.S. and can provide proof of income and down payment, your down payment must be at least 35 per cent of the purchase price. As well, your down payment cannot be a gift from another person or entity.
If you don’t have proof of income, you can still get a mortgage, but you’ll need a down payment of at least 50 per cent. A maximum mortgage of $750,000 is available to borrowers in this program, with a maximum amortization period of 25 years. (Note that If you already own property in Canada, you won’t qualify for this special program and will have to provide proof of income and a down payment of at least 35 per cent.)
What documents do non-residents need to qualify for a mortgage in Canada?
Unless you can put 50 per cent down, which exempts you from needing to provide proof of income, you’ll need:
- Proof of income (letter of employment, pay stubs and income tax returns)
- Proof of down payment (bank statements for the last 90 days)
- Reference letter from a bank outside Canada
- Report from an international credit bureau or bank statements for the last six months
Will lenders consider rental income as part of a non-resident’s income?
Lenders will not allow applicants to include rental income as part of their income to qualify.
What kind of mortgage rates and terms do non-residents get?
For the most part, provided they meet the mortgage eligibility criteria, non-residents can access the same mortgage products that are available to residents of Canada.
But there are a few restrictions:
- Some lenders may charge a rate premium for non-residents
- Non-residents cannot have amortization terms of more than 25 years
- Non-residents cannot get home equity lines of credit
- Non-residents cannot refinance
Do non-residents need to be in Canada at any point to secure financing for a home?
Usually, non-residents will need to be in Canada at least twice to complete the process of financing and buying property.
First, a buyer will need to visit Canada to open a Canadian bank account. (Note, there are exceptions to this rule. For example, some of our clients have found that, as HSBC Premier clients, they’ve been able to open accounts in Canada from their home countries.
Second, non-residents must be present at closing, as there are no power of attorney options for closing.
What taxes do non-residents pay when purchasing real estate in Canada?
Non-residents are subject to the same land transfer taxes as Canadian residents when they purchase property here. Those buying residential property in or near Toronto will be required to pay Ontario’s Non-Resident Speculation Tax, which is 15 per cent of the purchase price.
Want to learn more?
Buying a home from another country can seem like an overwhelming prospect because there’s so much to learn. But we’re happy to explain the details. As licensed mortgage brokers, we work with home buyers and a wide array of major lenders to match people with the perfect mortgage for their needs. Our services are free to the home buyer.