Buying a Home as a Newcomer or Permanent Resident in Ontario

Buying your first home after moving to Ontario involves rules that long-time residents never think about. Your immigration status can decide whether you may buy at all, whether you pay an extra tax, and which first-time buyer programs are open to you.

This article covers the main federal and Ontario rules for newcomers, from the foreign buyer ban to mortgages and savings plans. Your exact situation depends on your status and your purchase, so treat this as a map and confirm the details with a lawyer.

The federal foreign buyer ban

Under the federal Prohibition on the Purchase of Residential Property by Non-Canadians Act, a non-Canadian may not purchase residential property, directly or indirectly. A non-Canadian is an individual who is neither a Canadian citizen, nor a person registered as an Indian, nor a permanent resident. So a permanent resident is not caught by the ban.

The ban started on January 1, 2023, and a February 2024 announcement extended it to January 1, 2027. Check the current federal position before you buy, since the end date may have changed. It covers buildings with three homes or fewer, plus parts of buildings such as a semi-detached house or a condominium unit, and not larger multi-unit buildings. Property outside both a census agglomeration and a census metropolitan area is also excluded.

Breaking the ban can mean a fine of up to $10,000 on summary conviction, and a court may order the property sold.

Exceptions for temporary residents

• Work permit holders: exempt if the permit or authorization has 183 days or more of validity left on the purchase date and they have not bought more than one residential property.
• Spouses and common-law partners: a non-Canadian buying together with a spouse or common-law partner who is a citizen, registered Indian, permanent resident, protected person or qualifying temporary resident is exempt.
• Protected persons under s. 95(2) of the Immigration and Refugee Protection Act are exempt.
• International students: exempt only if they filed all required tax returns for the five preceding years, were in Canada at least 244 days in each of those years, the price is no more than $500,000, and they have not bought more than one residential property.

Ontario's Non-Resident Speculation Tax

Ontario's Non-Resident Speculation Tax (NRST) is 25% and applies to residential property anywhere in Ontario bought by a foreign national, foreign corporation or taxable trustee. A foreign national is an individual who is not a Canadian citizen or permanent resident. That is a different test from the federal ban, so you can be exempt from one and not the other.

There are exemptions for Ontario Immigrant Nominee Program nominees who have applied, or certify they will apply, for permanent residence, and for protected persons and certain spouses. Each requires a principal residence commitment within 60 days after registration. A rebate is also available if you become a permanent resident within four years, hold the property alone or only with your spouse, and occupy it as your principal residence within 60 days after registration. The application must be received within 180 days of becoming a permanent resident. The older student and worker rebates are no longer available.

Mortgage and down payment rules

The minimum down payment is 5% for homes of $500,000 or less; 5% of the first $500,000 plus 10% of the portion above $500,000 for homes from $500,000 to $1.5 million; and 20% for homes of $1.5 million or more. Below 20% down, you will typically need mortgage loan insurance. For CMHC insurance, the price must be below $1,500,000.

For newcomers, CMHC says permanent residents can use all of its homeowner mortgage loan insurance products, with no minimum period of residency. Non-permanent residents need legal authorization to work in Canada, such as a work permit. At least one borrower or guarantor needs a credit score of at least 600, and limited Canadian credit may be supported by alternatives such as an international credit report. A non-repayable gift from a relative is a traditional down payment source.

First-time buyer help and next steps

Ontario's first-time homebuyer land transfer tax refund is up to $4,000. For agreements signed after November 14, 2016, it is limited to citizens and permanent residents, but a buyer who is neither at closing has 18 months after registration to become one and then apply. The buyer must never have owned an eligible home anywhere in the world, which includes homes owned abroad.

A First Home Savings Account requires Canadian residency, and the participation room is $8,000 in the year you open your first account, with a $40,000 lifetime limit. The RRSP Home Buyers' Plan limit is currently $60,000, and the two can be used together for the same home.

• Confirm your status and whether the federal ban or NRST applies to your purchase date.
• Check whether the property is in a covered area and is a covered type.
• Ask a lender what documents they need for foreign income and credit history.
• Diarize any NRST rebate and first-time refund deadlines.
• Have a lawyer review your agreement before you remove conditions.

Frequently asked questions