Canadian US Mortgage Information – Foreign National Lenders

One of the common misconceptions regarding the purchase of property in the United States by a non-US citizen is that you can only purchase real estate with cash. Although purchasing with cash will often give you an advantage when making an offer on a property, many of us do not have a large amount of cash readily available. Also note that foreign banks including Canadian lenders cannot offer a traditional mortgage on Canadian-owned US property since they have no legal means to take possession if the US mortgage is in default.

Foreign National Mortgage Options for Canadians & International Buyers


The following are Foreign National mortgage options including Canadian US Property Mortgages available to Canadians and other non-US citizens to finance property in the United States. Note that they are in no particular order; each has its’ own advantages and disadvantages. In any case, it is suggested that you contact us to be referred to the preferred mortgage broker in your area of Canada or Internationally.

1. Use Equity in Your Home

One of the most popular methods being utilized by Canadians and other non-US citizens is to use the equity in their Canadian residence. By opening a Home Equity Line of Credit (HELOC), the borrower can use up to 80% of the equity in their home with certain Canadian lenders to apply to their US property purchase.

EQUITY TAKE-OUT ADVANTAGES:

  • Loan is secured, which will offer lower rates of interest currently ranging between 3.5 to 4%.
  • Protection against exchange rate fluctuations between the US dollar and the Canadian dollar or other currency.
  • Interest only minimum payments, giving borrowers a sense of security during a financial hardship.
  • Loan amount can be paid back and re-borrowed as often as you’d like up to the maximum credit amount.
  • Loan is completely open, meaning you can payback the entire amount at anytime without penalty.

EQUITY TAKE-OUT DISADVANTAGES:

  • Loan is secured to your Canadian residence.

2. Unsecured Loan or Personal Line of Credit

Some buyers choose to take out an unsecured loan or unsecured personal line of credit. Most with decent credit can obtain these loans, but the credit limit can vary based on your credit history and relationship with your bank. The Mortgage Centre can now open a CIBC Personal Line of Credit for their Ontario clients.

PERSONAL LINE OF CREDIT ADVANTAGES:

  • Loan is unsecured leaving the equity in your Canadian residence.
  • Protection against exchange rate fluctuations between the US dollar and the Canadian dollar or other currency.
  • Payback and re-borrowing privileges will depend on the type of loan.
  • Typically, the loan is completely open, meaning you can payback the entire amount at anytime without penalty.

PERSONAL LINE OF CREDIT DISADVANTAGES:

  • Loan is unsecured resulting in interest rates above 5.5% in most cases.

3. Traditional Mortgage Through a US Lender

Before the American real estate housing bubble burst, most US lenders would lend to Canadians and other foreign buyers for vacation properties and even US investment properties. Now, it is difficult to find too many US lenders willing to offer Canadian US mortgages or other foreign national mortgage products allowing a non-US citizen to purchase American real estate property.