How to get a U.S. Mortgage for Canadians

Canadians who want to take steps to owning property the U.S. may wonder how to get a U.S. mortgage. U.S. mortgages aren’t easy for Canadians and come with additional tax and legal requirements. However, there is a method that Canadians can use to their advantage.

Canadians can get a U.S. mortgage⁸ using a cross-border institution like RBC. RBC U.S. allows Canadians to seek a mortgage with their Canadian credit score, saving them money and navigating tax and legal implications as a foreign buyer.

The process to get a U.S. mortgage through RBC U.S. is simple. Get pre-approved online, submit your application and RBC U.S. will review and close the deal.

Financing a U.S. home through RBC offers many advantages to Canadians. This will be discussed in this article, along with other essential factors and the general fees involved.

What is a U.S. mortgage for Canadians

While you’re probably familiar with home financing in Canada, U.S. mortgages are different than their Canadian counterparts. Canadians face additional hurdles when financing homes in the U.S. These include not being able to qualify with U.S. lenders due to having no credit history in the United States and longer closing times.

Benefits of a U.S. mortgage for Canadians

There are many benefits to Canadians using this method compared to visiting American lenders, which are examined below.

Borrowers can use their Canadian credit history

The norm for getting a home loan from lenders in America is to provide an American credit score. This can put Canadians at a disadvantage. Hence, getting a U.S. mortgage for Canadians evens the odds, as RBC considers their Canadian credit score.

How to get a U.S. mortgage for Canadians

Now that we’ve covered what U.S. mortgages are and how they’re different for Canadians, we’ll dive into how to get one.

RBC (U.S.) serves Canadians with cross-border solutions. This bank is entirely online and available in all 50 U.S. states.

The unique advantage of using the services of this bank is that it is U.S.-domiciled and only works with Canadians. This built-for-Canadians solution makes getting U.S. mortgages and handling the accompanying legal procedures easier.

How to get a U.S. mortgage for Canadians

Applying for an RBC cross-border mortgage is easy. Prospective homeowners must gather the required documents and apply. These steps are outlined below. The whole process takes approximately 45 days.

Step 1: Get Pre-Approved

This is the first step to owning a U.S. home and involves filling out an online application. If you have questions you can also speak to an RBC U.S. Home Advisor.

Interested Canadians can visit this link to get started, and their pre-approval application will be reviewed within two business days. The pre-approval process educates borrowers on their eligibility for a home loan and the kinds of homes they can purchase.

Step 2: Send the Application

Here, the prospective homeowner and the RBC cross-border mortgage advisor will then start filling out the mortgage application. If the homeowner has already completed the application, the bank can cross-check to determine if anything is missing.

Step 3: Review the Required Documents

Some important documents are needed when getting a U.S. mortgage for Canadians. While the one below is a general list, the cross-border mortgage advisor will tailor it to your unique situation. The required documents include:

• Work visa or passport.
• U.S. Social Security Card or Social Insurance Number.
• Confirmation of income document to show if the Canadian is self-employed, a salaried employee, or a retiree.
• Purchase agreement (required for purchases under contract).
• Recent mortgage statements.
• Line of credit statements.
• Recent insurance fee statements.
• Current property tax statements for properties owned abroad or in Canada.
• Account statements should be no longer than two months for each account that the borrower holds.
• Home insurance policy documents.
• Flood and wind insurance policy documents.

After reviewing the documents and approving their validity, RBC will give the borrower a conditional approval letter. This letter is only valid for 60 days.

This financial institution will also book a licensed home appraiser for the borrower. In most cases, they also submit the request for flood determination and title work.

Step 4: The Closing

The borrower doesn’t do much at this stage, as RBC will work to ensure that all parties are satisfied. This includes the borrower and the person selling the home.

Types of RBC U.S. mortgages for Canadians

RBC’s U.S. solutions are tailored specifically to Canadians; therefore they provide many financing options to help Canadians get a U.S. mortgage. These financing options include:

RBC U.S. Mortgage

This is the primary option for an RBC U.S. mortgage. It offers all the benefits that a regular mortgage should.

An adjustable rate mortgage, or an “ARM”, is a loan type that offers a lower initial interest rate than most fixed rate loans. The trade off is that the interest rate can change periodically, usually in relation to an index, and the monthly payment will go up or down accordingly.

This is different than a Canadian mortgage where you pay a set amount with every payment – whether you’re holding a fixed or a variable rate mortgage. (While a Canadian variable rate mortgage will see fluctuations in the interest rate, you’ll still pay the same amount every month).

Mortgage Refinancing²⁷

This financing option helps homeowners who already have a mortgage get a lower rate. It allows the homeowners to borrow 80% of the equity in their property in U.S. dollars.

Home Equity Line of Credit

This is another method of refinancing, as homeowners can borrow up to 80% of the equity in their U.S. home. When they do this, they gain access to cash that can be used to cover home improvements or expansions, a large purchase, investments or consolidating debt.

Benefits of getting financing for a house in the U.S. using RBC

1. Expert Guidance with RBC U.S. HomePlus™ Advantage

Many people seeking U.S. mortgages are unsure where to start and may feel overwhelmed. Most don’t understand the process of getting a home in the U.S. Hence, RBC put together this program to help such people.

RBC U.S. HomePlus™ Advantage connects Canadians to a team of experts who are available to answer questions and provide guidance throughout the journey.

It also comes with a home search tool that offers real estate listings in the U.S. market, making the home search process easier. Some Canadians can also qualify for a cash reward of up to $9,500 when they close their property³⁸.

2. Flexible Monthly Payments

RBC  allows borrowers to choose the terms for paying their home loan. This could be 3-, 5-, 7-, or 10-year terms that’ll be paid off within 30 years²⁵.

Fees involved with getting a U.S. Mortgage

Another vital thing Canadians must consider when exploring how to get a U.S. mortgage is the fees involved. Many people get stuck on the way when their funds run out due to administration costs. This section covers some of the fees Canadians can expect so they’re not caught off guard.

• Interest rate: The interest rate for the home loan is determined by the borrower’s credit score. So, a good credit score will open doors to lower interest rates.
• Price of the home: A down payment is required before Canadians can move into their dream home. RBC mortgages in the U.S. have a down payment of 20%, which affects the home’s monthly payment. For people making a larger down payment, it’ll reduce the overall costs they’ll incur.
• Currency conversion costs: U.S. financing allows buyers to avoid a large one time foreign exchange conversion cost (vs. paying cash). RBC U.S. mortgage clients get a free premium checking account which features one of RBC’s best rates.
• Tax: This is unavoidable in getting a U.S. mortgage for Canadians. The homeowner’s tax depends on the property cost.
• Legal fees: This amount depends on how complex the home purchase deal becomes in the end. It’s also affected by the legal team that works on the case, as the fees for some teams are pricey.
• Lender fees: Most banks and mortgage lenders charge hefty fees for services like underwriting, processing, commitment, origination, application fees, and foreign national premiums. With RBC you can save thousands of dollars as they do not charge any bank or lender fees⁴².

Factors to consider when choosing a U.S. mortgage

There are a few key factors to consider when applying for a U.S. mortgage:

Big investment

Buying a home anywhere is a big investment due to the down payment required. RBC is an affordable U.S. mortgage lender to go with because they help you reduce foreign exchange fees. Plus, they don’t charge any lender fees which saves you thousands of dollars.

So while buying your U.S. home will require proper financial planning ahead of time, you’ll score some savings by choosing RBC as your mortgage lender.

Different process

The documentation required for Canadian and U.S. mortgages are quite different. While you may be familiar with Canadian mortgage lending, you may want to reach out to an RBC advisor who can provide guidance regarding the U.S. process.

It’s important to have the correct documentation ready when it comes time to close your U.S. home deal. RBC can help you with this when you get your U.S. mortgage through them. You’ll get access to cross-border real estate, tax, legal, insurance and financing experts.

Banking solutions for Canadians getting a U.S. mortgage

Successfully securing a U.S. mortgage for Canadians doesn’t mean the journey ends there. As most homeowners only hold Canadian accounts, it’ll be tough to escape the high exchange rates for turning Canadian dollars into U.S. dollars.

However, this can be made easier by securing a U.S. bank account, and RBC provides several options:

RBC U.S. Premium Checking

RBC offers an exclusive deal for their real estate clients to help manage their U.S. dollars. If you get a U.S. mortgage through RBC you can access their U.S. Premium Checking account, while normally customers would have to pay a fee of $99.50 per year.

This account is great for making your U.S. mortgage payments in USD so you can avoid costly foreign currency exchange fees. This account links with other Canadian dollar RBC accounts and offers unlimited transactions. And thanks to RBC’s exclusive offer, it’s very affordable.

RBC Visa^‡ Signature Black Credit Card²⁰

This card allows Canadians to avoid foreign transaction fees on their USD purchases – online or in person. Because you can apply with your Canadian credit history, it’s a great way to build your U.S. credit history.

Some great benefits of this card are that it doesn’t require an annual fee and you don’t need to have prior U.S. credit history to qualify as a cardholder. Plus, this card comes with travel and purchase bonuses, and cashback.

Conclusion on how to get a U.S. mortgage

Applying for a U.S. mortgage for Canadians is not as difficult as it could be when you have RBC on your side. With its cross-border advantage, they have made the process easier and offers trusted guidance along the way.

As a subsidiary of one of Canada’s most trusted banks, this financial institution is trustworthy enough for anyone to use their services.

So, any Canadian who wants to secure their dream home in the U.S. can do so with RBC Cross-Border Home Financing solutions.

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