Fixed or Variable? Mortgage Rates in Canada for U.S. Expats

Deciding between fixed and variable? When it comes to mortgage rates in Canada, U.S. expats have plenty to consider. Here’s what you need to know about your options, how Canadian rates work, and how to choose the right mortgage for your new home up north.

Eligibility requirements for U.S. expats to get Canadian mortgages

Before you start house hunting, it’s important to know if you’re eligible for a mortgage as a U.S. citizen in Canada. Canadian banks and lenders are generally open to working with non-residents, including U.S. expats, but they do have specific criteria you’ll need to meet.

Key eligibility factors include:

• Residency status: You do not need to be a Canadian resident or citizen to apply for a mortgage. However, your status (visitor, temporary resident, or permanent resident) may affect your options and down payment requirements.
• Income verification: Lenders will require proof of stable income. This often means providing recent pay stubs, tax returns, and employment letters—even if your income is earned outside Canada.
• Credit history: While a Canadian credit history is helpful, many lenders will accept a U.S. credit report. Some may require additional documentation or references from your U.S. financial institutions.
• Down payment: Non-residents typically face higher down payment requirements.
• Debt-to-Income ratio: Lenders will assess your ability to manage monthly payments based on your total debt and income, including any U.S. obligations.

Understanding Canadian mortgage types and programs for non-residents

Once you know you’re eligible, the next step is understanding the types of mortgages available to U.S. expats in Canada. The Canadian mortgage market offers several options, but not all are accessible to non-residents.

Common mortgage types:

• Fixed rate mortgages: Your interest rate stays the same for the term (often 1-5 years), providing predictable payments.
• Variable rate mortgages: The rate can fluctuate with the market, which may mean lower initial payments but more risk if rates rise.
• Open vs. closed mortgages: Open mortgages allow you to pay off your loan early without penalty, while closed mortgages typically offer lower rates but restrict prepayments.

Special programs for non-residents

Some Canadian banks have dedicated programs for non-resident buyers, including U.S. citizens. These programs may offer:

• Streamlined application processes for foreign income
• Acceptance of U.S. credit history
• Multilingual support and cross-border banking services

Down payment requirements and financing options for expats

One of the biggest differences U.S. expats face is the down payment requirement. Typically, non-residents must put down more than Canadian citizens or permanent residents.

Typical down payment rules:

• Non-residents: Most lenders require at least 35% of the purchase price as a down payment. This must come from your own resources (not borrowed funds).
• Permanent residents: If you have permanent residency, you may qualify for down payments as low as 5-20%, depending on the property and your financial profile.

Financing options:

• Personal savings: The most common source for down payments.
• Cross-border transfers: You can transfer funds from U.S. accounts, but be prepared to document the source and ensure compliance with both U.S. and Canadian banking regulations.
• Gifted funds: Some lenders accept down payments gifted by family, but strict documentation is required.

Building Canadian credit history and employment documentation

A strong credit profile and clear employment history are key to mortgage approval. But what if you’re new to Canada or don’t have a Canadian credit score?

Building credit as a U.S. expat

• U.S. credit reports: Many lenders will review your U.S. credit history. Obtain a recent credit report from a major U.S. bureau (Equifax, Experian, or TransUnion) to share with your lender.
• Canadian credit cards: If you plan to stay in Canada long-term, consider opening a Canadian credit card or secured loan to start building local credit.

Employment documentation

• Proof of income: Provide recent pay stubs, employment letters, and at least two years of tax returns. If you’re self-employed, expect to provide additional business records.
• Foreign income: Lenders may require income to be in a major currency (like USD) and may apply a discount to foreign income to account for exchange rate risk.

Interest rates and mortgage fees for non-resident borrowers

If you’re a U.S. citizen exploring mortgage rates in Canada, expect different rules and extra costs compared to local buyers. Non-residents are often charged higher interest rates and may need to budget for additional fees.

What to expect:

• Interest rates: Non-resident rates are often 0.25% to 0.50% higher than those offered to Canadian residents. Rates can vary widely between lenders, so shop around.
• Mortgage insurance: If your down payment is less than 20% (rare for non-residents), you’ll need mortgage default insurance, which adds to your costs.
• Legal and administrative fees: Expect to pay for legal services, property appraisals, and land transfer taxes. These can add several thousand dollars to your closing costs.
• Currency exchange fees: If you’re transferring funds from the U.S., factor in exchange rates and wire transfer fees.

Ready to take the next step? Get expert guidance on your expat taxes and finances

The Canadian mortgage process comes with unique tax implications for Americans abroad. Our team of cross-border tax experts can help you understand the reporting requirements, avoid costly tax mistakes, and stay compliant—so you can focus on your new home with confidence. Get in touch with Bright!Tax for tailored tax advice before, during, or after your move.

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