While Canadians in the United States do not seem to generate as much attention as the neighbors to the south, American mortgage lenders have certainly not forgotten about the folks from the Great White North. There are quite a few US lenders who offer financing for Canadian nationals even without any previous American credit.
Overall the loan process is very similar to that for Americans. First of all the borrower will need to complete a mortgage application. The two most important components in the application is the proper disclosure of employment, liquid asset and immigration status. The borrower will be required to furnish a letter of employment, relevant bank statements and a copy of the passport with an acceptable visa stamp. Once all the information has been verified the lender can then determine the most suitable program.
In my experience I have found that there are two distinct program options available. The first option works if the borrower has perfect Canadian credit. In this case the lender can go through a large credit depository like Chase and pull Canadian credit into their system. The lender can then use this in making a credit decision. There is no tolerance for bad credit in this option. Even one late payment on a small credit card account twelve months ago can kick the application out.
Armed with solid Canadian credit the borrower now has access to a wider choice of loan programs. They can qualify for fixed rate loan programs with limited pre-payment penalties and other features common to prime loans.
In the second program option the lender does not pull Canadian credit and only verifies employment, the liquid assets and the visa status of the applicant. In this case the loan programs are rather limited. These programs usually involve high down payment, variable interest rates, balloon payments and pre-payment penalties. Not all of these features may apply to the loan but will most certainly include a combination depending on the lender.
The two program options I describe above are only available for the purchase of a second home. Purchasing a primary residence is still available but will require a long-term US visa such as an H-1B. It also requires proof of continued employment in the US for up to three years. The process is then exactly the same as that for Americans.
[...] Greater Phoenix Metropolitan Area Real Estate Blog – This is smart blog authored by a very intelligent Real Estate agent Christoph Schweiger. I’m going to be regular contributor on this blog as well. My most recent article is called “Buying a Second Home in the United States as a Canadian“. [...]
Hi. I read your comments about canadians buying second homes in the US and it was very informative. I have another question for you and am wondering if you have an answer or no someone who might. What if you were buying a home in the US but you wanted to just pay for the house right off the bat. the canadian bank wants to charge 1% of the cost of the house to wire the money and the bank of america is charging a $15 processing fee which is fine but the exchange rate is worth then the current rate in canada. The canadian dollar at the bank of canada says .9930 cents while the bank of america currently says only .95 cents….big difference when your dealing with a lot of meoney. So my question is what would you suggest as the best way to send the money with the least amount of fees? thanks for your help
Hi Leah,
I think that it is more advantageous to exchange currency in Canada and wire the funds to the US.
From what I understand, whoever transfers the money in Canada will report to the Canadian Government’s FINTRAC and the receiving party in the US will report money transfers over $10,000.00 to the US Government.
Depending on the size of the transaction, I would recommend that you shop several banks and reputable currency dealers in Canada. Then, when you are ready to consummate a real estate transaction, wire the money electronically to the US. Always know with whom you are dealing with. If you purchase real property in Arizona the transaction will be settled with and Escrow Company, and independent third party. Other States may be different and use attorneys to settle real estate transactions.
DISCLAIMER: Nothing on this blog should be confused with financial or legal advice. If you need this, or any other type of advice, please seek the help of a competent professional.
We are looking at a new build in Arizona for a vacation home. We are purchasing the home through our business. If we mortgage, is it better for us tax wise to take out a mortgage here in Canada or in the U.S.?
When building a new home in arizona, is it necessary to have an agent working for you? I noticed in the model home that there was a sign with the someones name and their title was “designated broker”. Does this person have anything to do with our purchase? Who’s best interest are they looking out for? What do we need to be aware of before signing a contract to build?
Hello Debbie & Brian,
Please check your email in-box. I just sent you some information.
Hi Christoph,
What is the procedure if I don’t have a home here in Canada, but want to buy a condo in Michigan for investment purposes? What is the porcedure for the loan/tax implications etc?
Thanks,
Emma
Hello Emma,
Thank you very much for your comment! If I understand correctly you are concerned with tax consequences as a foreign national owning investment property in the US. I am not really qualified to give you tax-advice, however a good start is to check the website of the IRS:
http://www.irs.gov/businesses/small/international/article/0,,id=105000,00.html
You need to worry about Uncle Sam mainly when selling investment property as a foreign national.
As always, the best advice I can give you is to talk to a REALTOR®, professional CPA and/or Tax Attorney who has expertise in the State you intend to do business.
Hi There,
We are looking to buy a hoem down in Las Vegas, it would be a second residence (not for investment purposes). We have good credit and a good debt ratio can you direct us to a company in the states that would require only 10% or less down?
Thanks, Rhi
Hello Rhianna,
First of all are you Canadian?
I am a mortgage expert and I am very sure that there are no companies that allow mortgages for Canadians with only 10% down. Most programs need at least 40% down these days.
If you are not Canadian then I can certainly help you with a loan in Las Vegas – we can do second home loans for you. Please don’t hesitate to contact me and we can review different options and see what we can do. You can also fill out a mortgage application on my website at http://www.aimeeloans.com – click on the Apply Now button on the top right corner.
Christoph,
My name is Mark, I was recently in sunny Arizona and came across a property in Avondale. I spoke with the builder and came across a new build in progress, got a great price and now Im in the process of all the paperwork. Curious to know as a canadian citizen, am I looking to receive any tax costs from the US or Canadian government for owning this property, besids paying property tax, bills etc. I know if I sell, Im responsible for taxes. Im not looking to rent this home out but to have it as a vacation home for me and my family.
Thanks,
Mark
How does a Canadian citizen with a long term VISA (L-1) move to the United States and purchase a first home without any US credit history.
Hi, I am a Canadian Citizen on year 5 of an H1B (already renewed it once and will do so again next year). My company is in the process of sponsoring my green card. I am interested in purchasing a home – what types of programs would I qualify for, if any? My intention is to get my green card and move to the US on a permanent basis once the paperwork is completed. I have no Canadian credit and 760-780 FICO.
Hi all, I am thinking about buying a condo in Hampton Beach, NH. As a fisrt time USA buyer and current resident and dual citizen of US and Canada, can anyone direct me in the right direction of where to start. We are here in the USA for another week if I need to do any groud work while here. Any web sites would be helpful.PS I live and own (mortgaged) a property in Canada currently.
Ty
We just bought a house in the Phoenix area and we are Canadian citizens. We have a mortgage with a US bank. We plan to rent it out for now until we are ready to retire in 5-6 years. My questions are: Do we need to get an accountant to file for the rental income tax. Can we claim the interest on the mortgage on the US side. And I’ve read that if we rent it out, we can NOT do any work at the property, even clean the toilets! What if we decide to visit and stay at the house while it is vacant?
I own several Vacation Properties fee simple with Starwood Vacation Ownership. For example, I have 2 weeks at Westin’s Ka’anapali Ocean Resort Villas North on Maui that are oceanfront and dedicated Xmas and New Years weeks. The cost of these titled properties were around US$95,000 each. They come with title insurance. I’d like to put a mortgage on these for, say, 50% of their cost. I am a Canadian. Can you provide any guidance or recommendations as to how to get this done? Thanks.
Hey, I am a young Canadian looking to buy a place down in Hawaii or California. I am fairly open to what kind of property it is (condo, house, vacation rental). I basically want to rent it out and maybe pop in 2 or 3 times a year for a week or two vacation. What is my best option, considering all taxes, fees, etc. to make sure that my mortage is paid by renters every month and I hopefully can make a little bit of money? Would buying a rental property that gets rented out every night be best, or a property with long-term tennants??
I have a client that is a canadian citizen that wants to purchase investment properties in virginia. He has no intention of imigrating to the u.s. He also owns several properties in europe. Is there any lenders that can finance him, and is his non-visa or citizen status going to prevent him from purchasing?
I am looking at buying in the Phoenix area I am Canadian Citizen applying for HB1 @ moment I have good credit on my international credit is about 700 what kind of percentage am I looking at putting down I have been also employed with a company out of Houston texas for a year and a half
Thanks Ryan
I am a single woman living and employed in Canada. Recently had the opportunity to visit the Phoenix area and loved it and now would like to have a second home there. I would let other family members use it when I was not there but mostly it would be for me as an investment towards my looming retirement. What should I know before I purchase anything. I would be looking at financing it in Canada. What happens if I have to sell it in a couple years? Are there any costs associated with Canadians owning property.
I would love to open a business there as well but I think that is likely an immigration problem correct?
I am a canadian citizen want to buy a property in Florida to rent it out for the time being until I am ready to live in 5-6 years.
My question is; Is there any agency or firms I can work with to buy and rent out the property. And if so normally how much do they charge. Also If I want to sell the property what is the tax implication I should be careful about.
Your response would be highly appreciated,
Regards.
Khokan Das
I am a Canadian citizen and just sold my vacation home in the US. I have never worked or lived in the US except to vacation. A 10% withholding applied to the sale because I was a foreign national. Should I get a US tax ID #, what would be the advantage in getting it? I am required to file a US tax return? What about a Canadian return on the monies? Any help would be appreciated.
Hello,
I am a Canadian looking to buy a vacation condo in Florida. I am looking at buying with my fiance as well as my parents. We are all Canadian and have homes in Canada already. This would be a vacation home for all of us and we would hope to rent it out once in a while for help towards the mortage. It appears that we can not get a Canadian mortgage without using the equity in our homes, which we do not want to do. That would leave us to get an U.S. mortgage from my understanding. Where do we start with this? And what are all of the things that we need to consider?
Thanks so much for your help.
Hello,
My situation is a little complicated. I am looking into buying a property in Newport, RI with my common law partner and her sister. She is a US citizen, but a landed Canadian resident. Her sister lives in Newport and will be living in the house. We would be staying in Toronto, but want to take advantage of low housing prices as an investment.
My “sister in law” will be applying for the mortgage and I will be a cosigner (if that is the best solution). I also have a corporation that I would like to put the downpayment through. Is this possible when I will be a partner in the purchase and not the sole owner. And, is this the best way financially to go about purchasing in the US with my current situation?
Kim, doing loan products for foreign nationals are pretty limited right now. There are some lenders who loan on second homes to foreign nationals in Arizona – and they require a minimum of 25% down. I am not doing business in Florida and don’t have an answer for you. You might want to contact Gerry Suarez.
http://activerain.com/blogs/gsuarez
Hi, my wife and I would like to purchase vaction home in the Pheonix area. We were wondering if you could tell us if there’s any visa requirement for Canadians in order to aquire residential property in the US? We have the snowbird concept in mind here. Where to start? Any information, or links regarding this topic would be greatly appreciated. Thanks in advance.
Hi, I’m in the process of setting up business and subsequently a home in Texas. Being a Canadian citizen and owning property throughout the states are there any additional steps that need to be taken to ensure smooth boarder passage each time I want to go down?
I don’t plan on spending much more than 3 months of the year there.
Thanks
We purchased a home last year in SC. We used RBC and made a 20% downpayment, just a few months after Fanny May and Freddy Mac crashed.
I just wanted to point out a huge difference that’s left out of the article above, which is a contrast between buying property in the two countries.
MORTGAGE RATES: There are no accurate posted rates. You cannot look up what your bank’s rate would be. The bank sets your individual rate based on your individual credit and circumstance.
CLOSING COSTS. There is a massive difference. Closing costs include a bunch of bank fees we don’t have. But more importantly, they include your first year’s insurance and property taxes rolled right in. This means you have to declare exactly what you intend to use the property for IMMEDIATELY.
We bought our place for friends and family to use as well as us – so it would be for personal use but only occupied part of the time. Suddenly, 35 days after closing (over Christmas when we would not travel away from our kids) , we got a letter from our insurance company stating that our insurance was cancelled because they had done a spot inspection (at 15 days in!) and when they looked in the windows, they saw no furniture, therefore we were not being forethcoming.
When I phoned them to explain that it has only been 35 days and that we had not been down there yet with is being Christmas, nevermind had a chance to get furniture, they said too bad and that we had to get insurance for a empty home – which is higher. So we had to buy a 3 month policy and then change it after 3 months. And our “credit” with the insurance company was damaged because we has supposedly not been honest with them, so our rate went up!