Read more Life in Canada articles

How to buy a home as a newcomer in Canada

Buying a home in Canada might be different than in your home country, but don’t worry, we’ve provided the basics for you to begin your search!

As a newcomer, you might dream of buying a place to call your own. Before that dream becomes a reality, it's important to learn how the process works. Here's what you need to know to get on track to buy your first home.

Can newcomers buy a home in Canada?

Of course! However, most people don't have enough money in savings to pay the full cost of a property. The average home price in Canada (including detached and semi-detached houses, townhouses and condos) is $626,3181. In cities like Toronto and Vancouver, homes are even more expensive — often over $1 million. So, buyers usually pay a part of the cost right away, which is also referred to as a "down payment," and borrow the rest of the money as a mortgage loan. They then pay the loan back, with interest, over a set period.

Banks and other lenders use a set of rules to figure out which buyers can get a mortgage and how much they can borrow. So even though all newcomers are allowed to buy homes in Canada, in most cases, you'll need to meet the financial institution's rules to get approved for a mortgage first.

Watch the Buying Your First Home in Canada webinar hosted by Scotiabank and Prepare for Canada to better prepare yourself before making your first big purchase. The webinar covers the following topics:

  • Eligibility
  • Getting the best mortgage rates
  • Costs to buying a house
  • Scotiabank StartRight program

There is also a Q&A portion at the end of the webinar that addresses common questions newcomers have around home buying.

Who can get a mortgage in Canada?

To get a mortgage, you need to have stable a income and prove you can afford the mortgage payments. Before approving your loan, mortgage lenders will also look at:

  • The size of your down payment
  • The cost of the home you want to buy
  • Your total income
  • Any other money you owe, such as a car loan or credit card debt
  • If you have a Canadian credit history — meaning, if you've borrowed money in Canada before and paid it back on time

Tips for building your credit history

You'll have an easier time getting a mortgage — and lower interest rates on the loan — if you have a record of responsible borrowing in Canada. Here are a few ways you could create a good credit history as a newcomer to Canada:

  • Use a credit card. Apply for a credit card and use it to pay for everyday expenses. Just be sure to pay the balance in full each month (or at least make the minimum payment) to maintain good credit.
  • Always pay your bills on time. Being late or missing payments on your rent, electricity, cable, phone or credit card bills is bad for your credit history.
  • Take out a small loan. When you borrow money and make all your payments on time, you build up good credit. But be sure not to borrow too much, because that could prevent you from getting a mortgage.

Mortgage options for newcomers

As a newcomer, there are a few different types of mortgages you can apply for. Which one you choose depends on your work history, credit history and how much money you have for a down payment.

  • Conventional mortgage: Good for those who've had a job in Canada and can qualify for a mortgage within the guidelines of the bank with a full-time job and no probation, a minimum of 3 months of employment here in Canada, have a good credit history in Canada, and have at least 20% of the home's price for a down payment.
  • High-ratio mortgage: Good for those who've worked in Canada for at least two years, have a good credit history, and have 5% to 20% of the home's price saved for a down payment. But you'll also need to buy mortgage default insurance, which costs between 2.8% and 4.0% of your mortgage loan. Mortgage default insurance protects the lender if you can't pay back your loan. (Note: High-ratio mortgages are not available on homes that cost $1 million or more.)
  • Newcomer mortgage: Good for those who don't have the Canadian work and/or credit history needed for other mortgages. For example, you could qualify with just three months of work experience in Canada. And if you don't have any Canadian credit history, you can make a larger down payment (35% of the home's price).

Who can get a newcomer mortgage?

Temporary residents and permanent residents who have been in Canada for less than five years can apply for a newcomer mortgage.

To get a newcomer mortgage, you must have a full-time job in Canada where you've worked for at least three months. You also have to either:

  • Make a down payment of at least 10% of the home's price, assuming you also have a Canadian credit history and qualify for mortgage default insurance


  • Make a down payment of at least 35% with money from your own savings (not from a gift or other loan)

Each financial institution will offer different programs – learn more about Scotiabank’s here.

How do I get mortgage default insurance?

If you need mortgage default insurance, your lender will apply for it for you from one of the three providers in Canada: CMHC (Canada Mortgage and Housing Corporation), Sagen and Canada Guaranty. You can either pay for the insurance all at once in a single payment or add the amount to your mortgage loan and pay it off over time.

If you don't have much of a credit history in Canada, the provider might look at your rent payment history or an international credit report instead.

How to buy your first home in Canada

Now that you understand how to get a mortgage in Canada, here are the steps to follow when buying your first home here.

Find out what you can afford

House hunting can be time consuming and overwhelming. So, before you get started, figure out the types of homes that are within your budget by using an affordability calculator.

Get pre-approved for a mortgage

Things can happen fast when you find the home of your dreams, so be sure you have a mortgage pre-approval before you start making any offers. This will give you a good idea of how much you can borrow, the rate of interest you'll pay on your loan, and how much your mortgage payments will be. A pre-approval is usually valid for up to 120 days.

Start your search

With the information from your pre-approval, you can now research the homes and neighbourhoods in your price range. Then, feel free to start attending open houses and viewings. Most buyers use a real estate agent to help them with their search and guide them through the process, but you can also use an online home-search service or look on your own.

Make an offer

Once you find a home you like that is in your budget, you (or your real estate agent) will prepare an offer on paper. The seller can accept the offer, reject it or come back to you with a counteroffer. Plan to include a deposit (which can range from 1% to 3% of your full offer amount) with your paperwork. The deposit shows you're a serious buyer with enough money to complete the sale. If the seller rejects your offer, you'll get your deposit back.

Get a home inspection

A home can sometimes have problems that you're unaware of and could be expensive to fix. So, it's important to have a professional do a home inspection, which costs a few hundred dollars. An inspection is usually included as a condition when you make an offer.

Close the deal

You'll need to hire a lawyer to help handle the legal aspects of the sale. At this point, you'll also contact your lender to complete your mortgage documents. Make sure you have extra money set aside for these closing costs, including land transfer taxes, if they apply.

Incentives for first-time home buyers

While there's no newcomer homebuyer incentive in Canada, there are a few financial benefits for first-time buyers. For example, the First-Time Home Buyers' Tax Credit is worth up to $1,500, which you can claim on your annual tax return. You may also be eligible for a shared equity mortgage program (called the First-Time Home Buyer Incentive). And depending on the province you live in, you could also get a rebate on your land transfer taxes.

Bottom line

Now that you know the basics of buying a home as a newcomer, you're on your way to making the dream of homeownership in Canada a reality. Learn more about Scotiabank's mortgage options for permanent residents and temporary residents online, or book an appointment with a home financing advisor to find out the latest information on the best mortgage options for you. You can also book an appointment with a Scotia advisor to learn more about our Scotiabank StartRight® Program offerings for newcomers like you.

This article is provided for information purposes only. It is not to be relied upon as financial, tax or investment advice or guarantees about the future, nor should it be considered a recommendation to buy or sell. Information contained in this article, including information relating to interest rates, market conditions, tax rules, and other investment factors are subject to change without notice and The Bank of Nova Scotia is not responsible to update this information. All third party sources are believed to be accurate and reliable as of the date of publication and The Bank of Nova Scotia does not guarantee its accuracy or reliability. Readers should consult their own professional advisor for specific financial, investment and/or tax advice tailored to their needs to ensure that individual circumstances are considered properly and action is taken based on the latest available information.

1 Canadian Real Estate Association, January 2023.