{"id":9143,"date":"2021-05-18T15:07:32","date_gmt":"2021-05-18T15:07:32","guid":{"rendered":"https:\/\/www.canadianrealestatemagazine.ca\/can-you-get-a-u-s-mortgage-for-a-canadian-property\/"},"modified":"2023-10-24T04:18:41","modified_gmt":"2023-10-24T04:18:41","slug":"can-you-get-a-u-s-mortgage-for-a-canadian-property","status":"publish","type":"post","link":"https:\/\/www.canadianrealestatemagazine.ca\/expert-advice\/can-you-get-a-u-s-mortgage-for-a-canadian-property\/","title":{"rendered":"Can you get a U.S. mortgage for a Canadian property?"},"content":{"rendered":"

Have you thought about moving from the United States to Canada? Buying a house in Canada may seem like a stressful task for anyone, but it can be a great investment in your future while living abroad. We will answer your questions about getting a U.S. mortgage in Canada so you can determine what is best for your cross-border investment.<\/p>\n

Buying a home as a non-resident from the U.S.<\/b><\/h2>\n

First, it\u2019s important to determine your residency status by the standards of the Canadian government. Anyone who normally, customarily, and routinely lives in another country besides Canada is deemed a non-resident. Even if you choose to visit quite frequently, you are not granted residency as long as you stay in Canada for less than 183 days in the tax year. This is important information to keep in mind for buying a vacation property cross-border; you do not want to overstay and have to pay income tax in both countries.<\/p>\n

\"Buying<\/p>\n

\u00a0<\/p>\n

While this is said, any person can buy property in Canada as long as you have the necessary funds. Many U.S. citizens choose to buy real estate in Canada, whether it is a vacation home in Muskoka or an investment property in Vancouver. You can buy a home without needing to be a Canadian citizen.<\/p>\n

The only issue that comes to U.S. citizens buying property in Canada is that they are not allowed to use a U.S. bank for their mortgage. Because foreign banks are not allowed to register mortgages in Canada, so you will have to qualify for a mortgage in Canada.<\/p>\n

What are the benefits to Canadian real estate?<\/b><\/h2>\n

The benefits of buying a Canadian property differ from person to person. While you may want to buy your dream vacation home, others may look for an investment property that they can earn money off of. What costs can you expect when buying a Canadian property?<\/p>\n

Buying a second home can be a costly endeavour for many, especially if your Canadian dream home is located in an area where there are high living costs. U.S. citizens may have a more difficult time affording a home because of the higher property taxes and the requirement for a larger down payment from foreign buyers.<\/p>\n

\"What<\/p>\n

In fact, the GTA (Toronto and the surrounding areas) imposes an additional tax of 15% of the value of the property for some foreign buyers. This tax is called the NRST (non-resident speculation tax) and is designed to make it more difficult for non-residents to buy Canadian properties. While you may not be able to avoid this tax, any foreigners who pay the tax can later apply for a rebate if they live and work or study in the region – or become permanent citizens.<\/p>\n

A mortgage loan also will be significantly smaller for U.S. buyers. Mortgage lenders will only provide 65% of the cost while a U.S. buyer needs to have a 35% down payment already accumulated. This could mean that many foreign buyers may choose to simply get a mortgage in the U.S. rather than Canada.<\/p>\n

How can you get a Canadian mortgage?<\/b><\/h2>\n

This may seem like a daunting question for any person buying a home outside their place of residence. If you are only familiar with U.S. mortgages, we can help. We will provide a brief introduction and some advice for each step of the real estate purchase process.<\/p>\n

Set up a Canadian bank account with RBC Bank<\/b><\/h3>\n

The first step to beginning the mortgage process is to create a Canadian account in your name. Some great banks to consider are RBC Bank and BMO, which specialize in cross-border mortgages for Canadians. While they cannot offer you U.S. mortgages, they may be more familiar with U.S. and Canadian laws that could impact your home purchase.<\/p>\n

\"Set<\/p>\n

If you bank with a large U.S. bank that has international recognition, it may be possible that you can open a Canadian account with them. This would save you a visit to a bank in Canada.<\/p>\n

Get your credit cards and score in order<\/b><\/h3>\n

If you are coming from the U.S. to buy a house, you may think that your line of credit score registered to your U.S. bank may be able to be transferred to Canada. This is false. When you move countries, your credit score does not follow you. Before you consider investing in real estate, take your time to get Canadian credit cards and build up your credit score. A is one of the many ways you can improve your chances of getting a better mortgage interest rate.<\/p>\n

Qualifying for a mortgage<\/b><\/h3>\n

Be prepared to provide your credit history, income, and other financial documents when applying for a mortgage. A bank will want to access as much information as possible to ensure your trustworthiness, especially as a foreigner buying property. Expect to provide these documents to your bank or mortgage broker when qualifying for a mortgage:<\/p>\n