Guide for Canadians Buying Property in the United States
Buying property or holiday home is one of the top reasons Canadians transfer money to the United States. But wait – can foreigners buy properties in the US? The answer is yes. That said, buying property in the US as a non-citizen is a different kettle of fish.
Buying a house in the USA as a Canadian
You can buy and own a property in the United States as a Canadian or a foreigner. Many Canadian individuals and businesses buy property in the United States each year – whether for investment or vacation purposes.
If you're ready to invest in your own American dream home, you'll be pleased to know that your foreign citizenship won't get in the way. The only challenge you might face is navigating the landscape of foreign real estate transactions which comes with its set of tax and financing rules.
Are there any restrictions when buying property in the USA?
Canadians who have an eye on the US housing market often have many questions regarding the possibility of buying property in America.
Can foreigners and Green Card holders buy property in the USA to live? – Yes
Can foreigners buy an investment or rental property in the USA? – Yes
Are there any legal barriers to foreigners buying a property? – No
What type of home can you buy in the US as a foreigner? – You can purchase anything from single-family homes and co-op properties to commercial and investment properties.
What do I need when buying property in America?
When buying property in the US, you'll typically need to submit the following paperwork and documents:
Proof of identity. You'll need to provide your passport, visa, Green Card, and other identification information.
Proof of address. This is part of your contact details. If you plan to live in the US, you'll also have to submit proof of your legal residence status.
Documents to support your loan application. This only applies if you're financing your purchase.
Financial information. If you're applying for a mortgage, the lender will want to see proof of income and details of your monthly expenses and liabilities. This information helps them determine whether you can afford the loan.
5 steps to buying a house as a foreigner in the USA
Here's a quick step-by-step guide to buying a home in the US as a non-citizen.
1. Shop around for lenders
You can skip this step if you're paying cash for your home. On the other hand, you can secure a loan with a Canadian or US-based lender if you're financing the purchase. The important thing is to shop around and compare various offers before settling.
The biggest advantage of arranging to finance first is that you know how much you can afford once you're pre-approved. It becomes easier to narrow down your options when shopping for the perfect home.
2. Hire a US real estate agent
When you begin hunting for the perfect property, you can streamline your search by working with a US-based real estate agent that knows the territory. Communicate clearly with your agent so they know the exact type of property you want and other details, such as preferred amenities and location.
3. Make an offer
Sooner or later, you're bound to come across a property that suits your needs. You'll need to submit a fair offer based on market measurements when that happens. Your agent can help secure a better price by negotiating on your behalf.
The seller will review your offer, accept it, decline it, or counter offer. If your offer is accepted, you have taken the first significant step in securing the property you want.
4. Schedule a home inspection and appraisal
The importance of doing your due diligence checks can't be overstated. Before finalizing the deal, it's crucial to hire a home inspector and have the property appraised so you know exactly what you're getting into. The last thing you want is to buy a fixer-upper disguised as a fully functional home.
5. Close the deal
If everything is in order, it's time to initiate the real estate closing process. Once you have signed on the dotted line and paid all relevant fees, monies, and taxes, then congratulations, you're now an American homeowner – time to live the American dream!
Get to know the tax and fees details before buying USA property as a non-citizen
When buying property as a non-US citizen, keep in mind that you have to play by a different set of rules compared to US citizens. It's essential to understand the real estate tax situation before committing, though the need-to-know details tend to have many twists and turns.
The best recommendation is to enlist professional legal help to get clarification on issues like:
The cap on estate tax
Additional tax obligations
General tax requirements
Tax rates and treaties; and
Any other relevant, tax-related issue
What's the best way to pay for your property in the USA?
The best way to pay for your property in the USA depends on your financial situation and other factors. Generally, you can pay for your property by getting a mortgage or with cash.
1. Getting a mortgage
Canadian citizens who want to own real estate in the US can qualify for loans if they earn taxable income. This is because American lenders will consider income instead of residency or citizenship to determine eligibility. However, while it’s possible to get approval, the US mortgage process can be complicated for Canadians.
A simpler alternative would be to apply for a mortgage with a Canadian cross-border lender specializing in cross-border mortgages. Doing so offers the following benefits:
Better customer support. Canadian lenders and mortgage bankers that operate in the US offer greater support and understand how to deal with Canadians.
Competitive interest rates. You can leverage your Canadian credit history to get the best rate possible. In contrast, US lenders charge higher interest rates for foreign nationals without a US credit history.
Greater flexibility. Cross-border lenders accept Canadian documents and make it possible to apply for a US mortgage using your Canadian credit history. Additional perks can include prequalification, no prepayment penalties, and the option to choose the term of your mortgage.
Faster approval. US mortgages can take up to 45 days to process. On the other hand, a Canadian bank can quickly perform a credit check, which helps streamline your application.
2. Sending cash to the United States from Canada
Paying cash for your US-based home is a significantly easier option than financing. If you're making the payment from Canada, you'll need a convenient and cost-effective method of moving the required funds into the appropriate US bank account.
Using a specialist transfer service like MTFX can save you thousands of dollars with exchange rates 3-5% lower than banks.
If you need to make regular monthly repayments for your mortgage, you can easily set up fast, secure, and automated payments and stick to your loan agreement with minimal hassle.
Why do exchange rates matter when buying property in USA?
Whether you need to transfer money once-off or send money regularly from Canada to the USA, the exchange rate is worth keeping tabs on. The impact of different exchange rates on your pocket is difficult to ignore.
Banks are generally not in the habit of offering favorable rates and fees, so turning to a provider like MTFX is the best solution. You get bank-beating rates 3-5% lower (so you can save up to 5,000 USD for every 100,000 USD you send).
Foreigners can legally open a US bank account. This makes it convenient when you need to transfer money via MTFX from Canada to the US to cover mortgage payments.
Will I be able to sell my US-based home as a non-citizen?
You can sell your home in the US, provided you fulfill your tax obligations. It's best to hire a tax attorney to ensure compliance.
Will I become a resident if I own property in the US?
Buying a US-based property does not automatically give you residency. You'll need to submit a separate visa or residence application to gain legal residency.
How soon can I take ownership of my home in the US?
The home buying process can take anywhere from 30-60 days, depending on whether you're paying cash or financing the purchase.
Using MTFX to send money to pay cash for your home expedites the process since it usually takes 24-48 hours for your money to arrive. This is a convenient way to send money since the MTFX online platform is accessible 24/7.
Sign up to receive the latest market news from our experts.
Who can use the MTFX payment service?
Individuals and businesses who need to send money in foreign currency internationally can use MTFX’s services. The beneficiary of the transfer must have a bank account for the funds to be paid into.
Personal clients usually use our services to transfer money between their own accounts in two different countries.
Business clients usually use our services to transfer funds to suppliers, fund international operations, or repatriate overseas earnings.
Why should I use MTFX and not my own bank?
MTFX offers currency exchange rates that are 2-5% better than those offered by the banks. Personal clients usually save hundreds of dollars per transfer and for larger transfers, the savings can run into the thousands.
We also offer excellent customer service, dedicated currency specialists, and a 24/7 online platform with best-in-class technology that allows you to complete transfers from any device virtually anywhere in the world.
Business customers save with better currency exchange rates and proven solutions geared towards managing and mitigating foreign exchange risk. Our solutions include forward contracts, market orders, rate alert services, and much more - all backed by great technology and great people.
How do customers send funds to MTFX?
Funds can be transferred via wire transfer, Electronic Funds Transfer (EFT), or ACH payment services. MTFX maintains bank accounts in all major currencies with highly-rated banks. Our banking infrastructure ensures that you can transfer funds to us quickly and securely.
How long does it take MTFX to transfer funds?
Our global network of banking partners allows us to get funds to virtually anywhere in the world quickly and efficiently. Most wire transfers from MTFX will be received by your beneficiary within 24-48 hours. MTFX also offers same-day transfers that are almost instantaneous, as well as low-cost in-country payment services for your less urgent transfers. For further information please speak to one of our currency specialists.
Please read the following update before logging in to your MTFX online account
We have updated our online dealing system to provide you with better functionality, more unique tools and an overall enhanced client experience. MTFX Online 2.0 is now available for your dealing needs. You can begin using our enhanced online portal today.
Please note that the traditional portal will be available for use until MAY 30th 2021 at which point it will be decommissioned.