How to Get a Mortgage in Canada If You Are a Newcomer from India

If you’re a newcomer from India looking to buy your first home in Canada, getting a mortgage might seem like a daunting task. However, with the right information and preparation, you can make your dream of homeownership a reality. This comprehensive guide will walk you through the process of getting a mortgage in Canada as a newcomer from India.

Can Newcomers from India Buy a Home in Canada?

Yes, newcomers from India can buy a home in Canada. However, most people don’t have enough savings to cover the full cost of the property. According to the Canadian Real Estate Association, the average home price in Canada as of February 2023 was $662,437. As a newcomer, you’ll likely need to obtain a mortgage to finance your home purchase.

To qualify for a mortgage in Canada, you’ll need to meet certain requirements set by financial institutions, such as having a stable income, a good credit history, and a sufficient down payment. As a newcomer, you may face additional challenges, but there are mortgage options available to help you achieve your goal of homeownership.

Understanding the Canadian Mortgage Market

Before diving into the mortgage application process, it’s essential to understand the types of mortgages available in Canada:

  • Fixed-rate mortgages: The interest rate remains the same throughout the term of the mortgage, providing stability and predictability in your monthly payments.
  • Variable-rate mortgages: The interest rate fluctuates based on market conditions, which can result in changes to your monthly payments.
  • Hybrid mortgages: A combination of fixed and variable rates, allowing you to benefit from the advantages of both types of mortgages.

Mortgage terms in Canada typically range from 6 months to 10 years, with the most common term being 5 years. The amortization period, which is the length of time it takes to pay off your mortgage, can be up to 25 years for down payments less than 20%, and up to 30 years for down payments of 20% or more.

If your down payment is less than 20%, you’ll need to obtain mortgage default insurance from providers such as the Canada Mortgage and Housing Corporation (CMHC), Genworth Canada, or Canada Guaranty. This insurance protects lenders in case of default and is typically added to your mortgage payments.

Eligibility Criteria for Newcomers from India

To qualify for a mortgage in Canada as a newcomer from India, you’ll need to meet the following criteria:

  • Residency requirements: You must be a permanent resident or have a valid work permit to be eligible for a mortgage in Canada.
  • Credit history and credit score: Lenders will assess your creditworthiness based on your credit history and credit score. As a newcomer, you may need to build your credit history in Canada by using credit cards responsibly and making timely payments on bills and loans. Alternative credit sources, such as rent payments or utility bills, may also be considered by some lenders.
  • Employment and income requirements: You’ll need to provide proof of stable income and meet minimum income requirements set by lenders. This may include a letter of employment, pay stubs, and tax returns.
  • Down payment requirements: The minimum down payment for newcomers is typically 5% of the purchase price. However, if you have a limited credit history or are self-employed, you may be required to provide a larger down payment of 10% or more. You can source your down payment from savings, gifts from family members, or by using the Home Buyers’ Plan (HBP) to withdraw funds from your Registered Retirement Savings Plan (RRSP).

Tips for Building Your Credit History as a Newcomer from India

Building a strong credit history is crucial for securing a mortgage in Canada. Here are some tips to help you establish and maintain a good credit score:

  1. Use a credit card responsibly: Apply for a credit card and use it for regular purchases, ensuring that you pay your balance in full and on time each month.
  2. Always pay bills on time: Consistently making timely payments on your bills, including rent, utilities, and phone bills, can help demonstrate your financial responsibility to lenders.
  3. Take out a small loan and repay it on time: Consider taking out a small personal loan or car loan and make sure to repay it as agreed. This can help build your credit history and show lenders that you can manage debt responsibly.

Mortgage Options for Newcomers from India

As a newcomer from India, you may be eligible for one of the following mortgage options:

  1. Conventional Mortgage: If you have a stable job and a good credit history in Canada, you may qualify for a conventional mortgage. This type of mortgage requires a down payment of at least 20% of the purchase price and does not require mortgage default insurance.
  2. High-Ratio Mortgage: If you have been working in Canada for at least 2 years, have a good credit history, and can provide a down payment between 5% and 20%, you may be eligible for a high-ratio mortgage. This type of mortgage requires mortgage default insurance, which can be paid in a lump sum or added to your mortgage payments.
  3. Newcomer Mortgage: Some lenders offer special mortgage programs for newcomers with limited work and credit history in Canada. These programs may require a down payment of 10% to 35% of the purchase price and may have slightly higher interest rates compared to conventional mortgages.

How to Get Mortgage Default Insurance

If your down payment is less than 20%, you’ll need to obtain mortgage default insurance from one of the following providers:

  • Canada Mortgage and Housing Corporation (CMHC)
  • Sagen (formerly Genworth Canada)
  • Canada Guaranty

The cost of mortgage default insurance depends on the size of your down payment and can be paid in a lump sum or added to your mortgage payments.

Preparing to Apply for a Mortgage as a Newcomer from India

Before applying for a mortgage, you’ll need to gather the necessary documents and take steps to improve your credit score and save for a down payment.

Gathering necessary documents

  • Identification documents, such as your passport and permanent resident card or work permit
  • Proof of income and employment, such as pay stubs, letter of employment, and tax returns
  • Proof of down payment, such as bank statements or gift letters
  • Additional documents for self-employed individuals, such as business financial statements and contracts

Improving your credit score

  • Pay all bills on time
  • Keep credit utilization low (aim to use no more than 30% of your available credit)
  • Check your credit report for errors and dispute any inaccuracies

Saving for a down payment

  • Create a budget and set aside money each month for your down payment
  • Consider using government programs for first-time homebuyers, such as the Home Buyers’ Plan (HBP), which allows you to withdraw up to $35,000 from your RRSP to use towards your down payment

Steps to Buy Your First Home in Canada as a Newcomer from India

  1. Find Out What You Can Afford: Use an affordability calculator to determine how much you can comfortably spend on a home based on your income, debts, and living expenses.
  2. Get Pre-Approved for a Mortgage: Apply for a mortgage pre-approval to find out how much you can borrow and lock in an interest rate for up to 120 days. This will also help you narrow down your home search to properties within your budget.
  3. Start Your Search: Research homes and neighborhoods that fit your criteria and budget. Consider working with a real estate agent who can provide valuable insights and help you navigate the home-buying process.
  4. Make an Offer: Once you find a home you like, work with your real estate agent to make an offer. Include any conditions, such as a home inspection or financing, and be prepared to negotiate with the seller.
  5. Get a Home Inspection: Before finalizing your purchase, hire a professional home inspector to assess the condition of the property and identify any potential issues or repairs that may be needed.
  6. Close the Deal: Hire a real estate lawyer to review and finalize your mortgage documents and transfer ownership of the property. Be prepared to pay closing costs, such as land transfer taxes and legal fees.

Incentives for First-Time Home Buyers in Canada

As a first-time homebuyer in Canada, you may be eligible for the following incentives:

  • First-Time Home Buyers’ Tax Credit: You can claim a non-refundable tax credit of up to $5,000 on your income tax return, which can provide up to $750 in tax savings.
  • First-Time Home Buyer Incentive: This shared equity mortgage program allows you to borrow 5% or 10% of the purchase price of a home from the government, which can help reduce your monthly mortgage payments.
  • Provincial Land Transfer Tax Rebates: Some provinces offer land transfer tax rebates or exemptions for first-time homebuyers. Check with your provincial government to see if you qualify.

Choosing the Right Mortgage Product as a Newcomer from India

When selecting a mortgage, consider the following factors:

  • Compare mortgage rates and terms from multiple lenders to find the best deal
  • Decide whether to work with a mortgage broker, who can help you compare options from various lenders, or go directly to a bank
  • Consider prepayment options and penalties, which can affect your ability to pay off your mortgage faster or refinance in the future
  • Evaluate the costs associated with the mortgage, such as appraisal fees, legal fees, and mortgage default insurance premiums

The Mortgage Application Process for Newcomers from India

  1. Pre-approval: Submit your mortgage application and supporting documents to your chosen lender to get pre-approved for a mortgage. This will give you a clear idea of how much you can afford to spend on a home.
  2. Submitting the mortgage application: Once you’ve found a home and made an offer, work with your mortgage professional to finalize your mortgage application. Provide any additional documentation requested by the lender.
  3. Mortgage approval and closing: Upon approval, your lender will provide you with a mortgage commitment letter outlining the terms and conditions of your mortgage. Review and sign the mortgage documents with your lawyer, and be prepared to pay closing costs and disbursements.

Tips for Newcomers from India Seeking a Mortgage in Canada

  • Start building your credit history as soon as possible by using credit responsibly and paying bills on time
  • Save as much as you can for a down payment to reduce your mortgage default insurance costs and improve your chances of approval
  • Be prepared to provide extensive documentation to support your mortgage application, including proof of income, employment, and assets
  • Consider alternative lenders, such as credit unions or private lenders, if you are turned down by traditional banks
  • Seek professional advice from a mortgage broker or financial advisor who specializes in working with newcomers to Canada


Getting a mortgage in Canada as a newcomer from India requires careful planning, preparation, and an understanding of the Canadian mortgage market. By following the steps outlined in this guide, you can improve your chances of securing a mortgage and achieving your dream of homeownership in Canada.

Remember to start the mortgage process early, as it can take time to build your credit history, save for a down payment, and gather the necessary documents. Don’t hesitate to seek professional guidance from a mortgage broker or financial advisor who can help you navigate the process and find the best mortgage solution for your unique situation.

With the right information and support, you can successfully obtain a mortgage and start building your new life in Canada.

Additional Resources

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Ready to start your homeownership journey in Canada? Speak to a mortgage specialist today to discuss your options and get pre-approved for a mortgage. Book an appointment with a mortgage advisor who specializes in working with newcomers from India to learn more about how you can make your dream of owning a home in Canada a reality.

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