Newcomer's Guide to Buying a Home in Canada in 2025
Newcomer's Guide to Buying a Home in Canada in 2025
Homeownership is a major goal for many newcomers to Canada — and it's entirely achievable, even early in your settlement journey. However, the Canadian real estate market operates differently than most countries. This guide gives you the complete roadmap.
Who Can Buy a Home in Canada?
Both Canadian citizens and permanent residents can purchase property in Canada. Temporary residents (work permit holders, international students) can also buy, but with additional restrictions under the Prohibition on the Purchase of Residential Property by Non-Canadians Act (2023). As of 2025, some exemptions exist — consult a real estate lawyer to confirm your eligibility based on your immigration status.
Step 1: Improve Your Financial Health First
Before applying for a mortgage, lenders look at:
- Credit score – Aim for 680+ (use secured credit cards to build credit)
- Down payment – Minimum 5% for homes under $500K; 20%+ to avoid CMHC insurance
- Debt-to-income ratio – Total monthly debt payments should stay below 44% of gross income
- Employment stability – Most lenders want 2 years of employment history in Canada
Step 2: Use the First Home Savings Account (FHSA)
The FHSA is a tax-free savings account introduced in 2023 designed specifically for first-time buyers. Key features:
- Annual contribution limit: $8,000
- Lifetime contribution limit: $40,000
- Withdrawals for a qualifying first home are completely tax-free
- Contributions are tax-deductible (like an RRSP)
Open an FHSA as soon as you become a Canadian resident — the earlier you start, the more you can save.
Step 3: Get Pre-Approved for a Mortgage
A mortgage pre-approval tells you exactly how much you can borrow and shows sellers you're a serious buyer. You'll need:
- Proof of income (T4 slips, pay stubs, or NOA from CRA)
- Bank statements (3–6 months)
- Photo ID and proof of residency/status
- Statement of down payment source
Newcomer-friendly mortgage programs:
- RBC Newcomer Mortgage – Available within 5 years of landing
- TD New to Canada Mortgage – Flexible credit requirements
- CIBC Newcomer Mortgage – Accepts foreign income verification
- Scotiabank StartRight Mortgage – Waives standard credit score requirements
Step 4: Understand the Full Cost of Buying
Beyond the purchase price, budget for:
| Cost | Amount |
|------|--------|
| Land Transfer Tax | 0.5%–2% of purchase price |
| Legal fees | $1,500–$2,500 |
| Home inspection | $400–$600 |
| CMHC insurance (if <20% down) | 2.8%–4% of mortgage |
| Moving costs | $1,000–$5,000 |
| Property tax (annual) | 0.5%–1.5% of assessed value |
Step 5: Work with a Realtor
In Canada, buyers typically don't pay their realtor — the seller pays both agents' commissions. Choose a realtor experienced with newcomers who understands your cultural preferences and budget.
Step 6: Make an Offer and Close
Once you find a home you love, your realtor will guide you through the offer process. Key conditions to include:
- Home inspection condition – Protects you from unknown defects
- Financing condition – Protects you if your mortgage falls through
- Closing date – Typically 30–90 days from offer acceptance
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Frequently Asked Questions
Can a newcomer with a work permit buy a house in Canada?
Work permit holders may buy property in Canada, but are subject to restrictions under the 2023 foreign buyer ban with specific exemptions. Always consult an immigration and real estate lawyer to confirm eligibility based on your current status.
What is the minimum down payment to buy a home in Canada?
The minimum down payment in Canada is 5% for homes under $500,000, 10% for the portion between $500K–$999K, and 20% for homes $1 million or more.
Can I get a mortgage in Canada without 2 years of employment history?
Some banks offer newcomer mortgage programs that waive the standard 2-year employment history requirement. RBC, TD, CIBC, and Scotiabank all have programs designed for recent immigrants.
What is the FHSA and how does it help newcomers?
The First Home Savings Account (FHSA) allows first-time buyers to save up to $40,000 tax-free. Contributions are tax-deductible and withdrawals for a qualifying home purchase are completely tax-free — making it one of the best savings tools for newcomers.