If you’ve ever lived abroad you know how difficult it is to get basic things that you take for granted in your own country such as a bank account, credit card, telephone services, etc. Over the last few years it’s become even more complex as there are now so many laws and regulations that are designed to prevent money laundering - it can be virtually impossible. Oftentimes, for those people who have recently arrived in Canada, it can be just as tricky to secure a mortgage in this country.
Thankfully, RBC is working with Genworth Financial and the Canadian Mortgage Housing Corporation (CMHC) to offer qualified homebuyers who have moved to Canada a mortgage with as little as a 5% payment and have outlined the steps and requirements below.
Approved mortgage types and properties
Acceptable home loan purposes for recent immigrants and people who have relocated to Canada are new home purchases, improvements and extended amortizations available up to 35 years.
There are a few restrictions on the type of properties that can be purchased such as a maximum of 2 units and one must be used as the principal residence, meaning you have to live in the property as your main home. It’s fairly flexible for the type of property you can buy as newly built houses and existing properties that are on the market are acceptable.
Loan-to-value ratio limits
The ‘Loan-to-value’ or LTV ratio as it’s commonly known is the amount of the property value less the down payment you can make over the property value. For example, if you were looking at a $100,000 property and had a $10,000 down payment (ie. $100K - $10K = $90K mortgage) the LTV would be 90% ($90K/$100K).
The maximum LTV ratio available to people new to Canada is currently 95%. 100% mortgages were available until October 2008 as the government stopped insuring $0 down payment mortgages in an effort to avoid a US style housing crisis and stop the so-called “sub-prime” mortgages from becoming a problem.
The table below outlines the LTV ratios and the insurance premiums you’ll have to pay to CMHC, the mortgage default insurer, on top of the loan for the mortgage default insurance which protects the lender in case the mortgage holder isn’t able to make the payments.
| LTV ratio | Premium rate |
| Up to 65% | 0.50% |
| 65.01% - 75% | 0.65% |
| 75.01% - 80% | 1.00% |
| 80.01% - 85% | 1.75% |
| 85.01% - 90% | 2.00% |
| 90.01% - 95% | 2.75% |
| * Please note the premiums are non-refundable | |
Qualifications required
The following qualifications are required for a mortgage:
- Maximum GDS/TDS: 32%
- Maximum GDS/TDS including heating payments: 40%
GDS ratio stands for the “gross debt service ratio” and is the percentage of the gross annual income that is needed to cover the mortgage payments. The total payment includes the mortgage principal, interest payable, taxes and can include other expenses such as heating and condo fees.
TDS ratio stand for the “total debt service ratio” and is the percentage of gross annual income that is needed to cover mortgage payments and all other debts such as car loans, personal loans, credit lines and credit cards.
In addition, you must have:
- Moved to Canada within the last 3 years (36 months)
- Had at least 3 months of full time employment in Canada - there is an exemption available if you have been transferred through your work
- Already have a valid work visa or have already received landed immigrant status
- All your international debts and obligations must be included in the TDS ratio
- Rental income on foreign properties can be excluded from the GDS/TDS calculation
Necessary documentation
You will need to supply the following documents to the mortgage lender:
- A valid work visa or verification of landed immigrant status
Depending on the LTV you’re looking at you’ll need:
- 95% LTV: an international credit bureau
- 90% LTV: A letter of reference from a recognized financial institution, or 6 months of historic bank statements with active account operations and no non-sufficient fund charges
- 85% LTV: if you’re getting a guarantor to help you with the process, then you will only need to show a valid work visa and the proof of landed immigrant status, otherwise, the same documentation is needed as per the 90% LTV
Credit and Down Payment Guidelines
| Loan-To-Value Ratio | Max LTV | Max LTV | Max LTV |
| Credit Requirements | International credit report proving a strong credit history | Reference letter from an internationally recognized financial institution or 6 months of historic bank statements from a primary account | If no credit references are available - a Canadian family guarantor with a strong credit profile is required |
| Down Payment | 5% from own resources | 10% from own resources 5% can come from a corporate relocation subsidy | 15% from own resources Up to 10% can be a gift from the guarantor |
Please note that this program is not available to any foreign Diplomats in Canada or any other foreign politically appointed individuals who don’t pay income tax in Canada.
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