You may earn a salary abroad, own property overseas or keep your savings in another country. All of this can help you buy a home in Canada, but lenders treat foreign money with more care than a Canadian pay stub. The key question is simple: can the lender verify the money from reliable documents?
Why lenders are careful with foreign income
Federally regulated lenders follow OSFI’s Guideline B-20. It says that borrowers who rely on income from outside Canada “pose a particular challenge” for income verification, and that lenders should do thorough due diligence. Income that reliable, well-documented sources cannot verify should be treated with caution.
B-20 also expects income to be confirmed by an independent source that is hard to falsify and that shows the actual amount.
There is no single national rule that says how much foreign income counts. Each lender decides, so two lenders can give you very different answers.
What lenders may accept
- Foreign employment income. Some lenders may consider it if it is stable and documented. Others may count only income earned in Canada. Check with your lender.
- Foreign rental income. Do not expect it to count. Sagen’s New to Canada program and Canada Guaranty’s Maple Leaf Advantage both exclude foreign rental income from their debt ratios.
- Foreign debts. These do count. Both programs require debts held outside Canada to be included in your debt ratios, including a mortgage on a home abroad.
- Foreign assets. Assets can support your application and can pay for your down payment, but they are not income in the GDS and TDS ratios. B-20 also notes that lenders may find it harder to collect from foreign assets if a borrower defaults, so these assets may carry less weight.
The stress test and the ratio limits apply to insured mortgages whatever the source of your income: the greater of your contract rate + 2% or 5.25%, GDS of 39% and TDS of 44%.
If you are not a Canadian citizen or permanent resident, check the federal rules first. See buying on a work or study permit.
Worked example: what foreign income can change
Wei is a permanent resident who earns $95,000 at a job in Canada. Wei also earns the equivalent of C$50,000 a year from a job abroad and C$20,000 a year in rent from an apartment abroad, which has a mortgage payment of C$900 a month. The property Wei wants to buy has tax of $4,800 a year and heating of $125 a month. The rate is 4.49% (6.49% to qualify) over 25 years.
| How the lender treats it | Income used | Other debts | Maximum mortgage |
|---|---|---|---|
| Canadian salary, foreign mortgage ignored (not realistic) | $95,000 | $0 | $382,900 |
| Canadian salary only, foreign mortgage counted | $95,000 | $900/month | $307,600 |
| Foreign salary also verified, foreign mortgage counted | $145,000 | $900/month | $581,500 |
The rent is left out of all three rows. The difference between the last two rows is about $273,900 of borrowing power. That is why it is worth finding a lender that can verify your foreign salary, and why you should prepare the documents before you apply.
Documents to prepare
Requirements vary, so ask your lender for its list. For foreign income, expect to be asked for some of these:
- An employment letter that shows your position, start date and salary.
- Recent pay slips and foreign tax returns or tax assessments.
- Bank statements that show your salary arriving in your account.
- Statements for any foreign mortgage or loan.
- Your Canadian notices of assessment from the Canada Revenue Agency (CRA), if you have them.
Your documents should agree with each other. B-20 says lenders should confirm that income documents don’t contradict other information in your application. Canadian residents must report their worldwide income to the CRA, so income that you tell a lender about but did not report for tax can become a problem.
Moving money to Canada
Your lender must verify the source of your down payment.
- Open a Canadian account early and send the money directly from your own foreign account.
- Keep the records: foreign bank statements that show how the savings built up, the wire confirmation, proof of any asset sale and the Canadian statement that shows the money arriving.
- Avoid informal channels. Informal transfer services and transfers through other people’s accounts are hard to document. A lender may refuse money it cannot trace.
- Check your home country’s rules. Some countries limit how much a person can send abroad each year. Plan early, and ask a bank there what is allowed.
- Gifts. Money from a relative needs a gift letter.
FINTRAC and large transfers
FINTRAC is Canada’s financial intelligence agency. At a high level:
- Electronic transfers. Reporting entities report electronic funds transfers of $10,000 or more to FINTRAC within 5 business days. This also applies to several transfers in 24 hours that add up to that amount.
- At the border. Anyone carrying $10,000 or more in currency or monetary instruments into or out of Canada must report it to the Canada Border Services Agency.
- Mortgage businesses. Since October 11, 2024, mortgage administrators, brokers and lenders have had their own FINTRAC duties, including confirming client identity and keeping records.
Reports are filed by the bank or business, not by you (except at the border). A report is not a tax and does not mean you did anything wrong. Do not split a transfer into smaller amounts to avoid a report: this can look suspicious, and it makes your records harder to follow.
Foreign assets and Canadian tax
If you are a Canadian resident and the total cost of your specified foreign property is more than $100,000 at any time in the year, you may need to file CRA Form T1135. This does not apply to an individual for the year they first become a resident. Ask a tax professional what applies to you.
What to do before you apply
- Move your down payment and closing costs to Canada early, with complete records.
- List all your income and debts in every country. Assume the debts count and the foreign rent doesn’t.
- Calculate your numbers with Canadian income only, then with your foreign salary, in the affordability calculator.
- Gather your documents and have them translated if your lender requires it.
- Ask several lenders or a broker these questions: Do you count foreign salary? What percentage? What exchange rate do you use? How long a history do you need?
- Build Canadian credit. See buying a home as a newcomer.
- Get a pre-approval in writing before you make an offer, and make the offer conditional on financing.
Sources: OSFI, Guideline B-20; Sagen, New to Canada; Canada Guaranty, Maple Leaf Advantage; FINTRAC, transactions reported; FINTRAC, mortgage administrators, brokers and lenders; CRA, reporting worldwide income; CRA, Form T1135. All maximum mortgages were calculated with this site’s mortgage engine.