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Getting a Mortgage in the U.S.: Understanding the Differences from Canada

Congratulations on considering purchasing real estate in the United States. With today’s low interest rates and wide selection of properties available at competitive prices, now is a perfect time to make a real estate purchase in the U.S.

Before you get started, it’s important to understand the differences between mortgages in Canada and in the U.S. As the only national mortgage provider for Canadians purchasing property in the U.S., RBC Bank is available to not only meet your mortgage needs but also smoothly guide you through the process. As your trusted advisor, we’ll let you know what to expect at every step along the way and help be sure you get the mortgage that is right for you – all with the peace of mind of RBC Bank. Now, let’s get started.

Benefits of a U.S. Mortgage

The U.S. mortgage industry is highly regulated. That means securing a mortgage loan in the U.S. is more complex and takes a while longer than in Canada. Yet, there are several benefits to financing real estate in the U.S. with RBC Bank.

  • No pre-payment penalties. You can repay your mortgage at any time you like. Second, with RBC Bank, we can use your Canadian credit history to help decision your loan.
  • We review your full RBC relationship to know as much as we can about you.
  • We specialize in mortgage lending for Canadians. Our team of cross-border mortgage specialists guide you through the process and make it as easy as possible for you. Because there are differences between Canada and the U.S. this is especially beneficial.

Important Differences between Canada in the U.S.

  • Timing – While it only takes a few days to apply for and secure a mortgage in Canada, the process is longer in the U.S. Typically, it takes 30-45 days to apply for and secure a mortgage in the U.S. Important steps in the process include completing the application, retrieving credit, gathering income and asset documents provided by the buyer, ordering third party documents such as the appraisal and title, credit loan review and approval, and preparing closing documents.
  • Documentation – In the U.S., securing a mortgage requires more documentation than in Canada due to the highly regulated environment. Refer to the Document Checklist to understand what you’ll like be asked to provide.
  • Costs – Costs in the U.S. can be higher than Canada as well due to required third party expenses such as the property appraisal, titling and certain insurances. On average, you can expect to pay between 3-5% in fees when financing property in the U.S. Standard application and transaction settlement fees apply and are provided in detail in the initial disclosure package you will receive once an application is completed.
  • Mortgage Interest – Mortgage interest is another point of difference. In the U.S., mortgages are compounded monthly, while in Canada they are compounded semi-annually. In addition, mortgage interest may be deductible against taxes in the U.S.
  • Down payments – Typically, a down payment of at least 20% of the value of the home is required in the U.S. The down payment requirement is dependent on the purpose of the property purchase. Purchasing a home to be utilized as a primary residence, second home or investment property will require varying down payments.

In the U.S., you will be asked to provide information and documentation about the source of your down payment. It is critical that once you’ve deposited your down payment funds into your banking account, that remain in the account that has been verified in order to avoid delays in the process.

Now that you know the value of getting a mortgage in the U.S. plus the differences between the U.S. and Canada, you’re ready to get started learning about the process you’ll experience. Read our Getting a Mortgage in the U.S.: What to Expect guide to learn more, today.

†All loans are subject to approval, including verification of acceptable income, creditworthiness, and property valuations. Minimum and maximum property values and maximum loan-to-value ratios apply. Homeowner’s insurance is required for all loans and flood insurance is required if property is located in a Special Flood Hazard Area. Escrows may be required. There are closing costs associated with these products.