Can An International Student Buy A House In Canada?

It's a big question, but yes, international students can buy property in Canada. However, there are specific requirements you'll need to meet.

Keep reading.

Canada's foreign buyer ban

In January 2023, Canada introduced the Prohibition on the Purchase of Residential Property by Non-Canadians Act, commonly known as the foreign buyer ban. This law prohibits non-Canadians from purchasing homes within Census Metropolitan Areas with populations of 100,000 people or more, and it has been extended to remain in effect until January 1, 2027.

Before you panic, here's the important part: international students are among the groups exempt from this ban, but only if they meet certain conditions.

Requirements for international students to buy property

To qualify for the exemption, international students must be enrolled in a designated school under an authorized study program, have filed income tax returns for each of the five preceding years before the home purchase, and have been in the country physically for at least 244 days for each of the five preceding years before the home purchase.

Additionally, there are a few other important stipulations:

• You must be purchasing a property that is $500,000 or lower
• You cannot have previously bought a home in Canada during the prohibition period
• You must demonstrate an intention to become a permanent resident and settle permanently in Canada

These requirements are quite strict, which means most international students who've just arrived in Canada won't immediately qualify. However, if you've been studying in Canada for several years and have established financial roots through consistent tax filing, homeownership becomes a realistic possibility.

Properties covered by the ban

It's important to understand which properties fall under the foreign buyer ban. The restrictions apply only to residential properties, defined as including a detached home, a semi-detached house, a group of up to 3 dwelling units, a condominium, a rowhouse, or a similar residential complex containing fewer than 4 dwelling units.

This means if you're looking at commercial properties or multi-unit residential buildings with four or more units, these fall outside the ban's scope and have different purchasing rules.

Additional costs to consider

Beyond the purchase price and down payment, there are several additional costs you should factor into your budget:

Taxes and fees

Depending on your province, you may face additional taxes as a non-resident:

• Non-Resident Speculation Tax (NRST): In Ontario, this tax is 25% and applies to the value of the home's consideration, which differs from the purchase price and is determined by assessing upgrades, installations, liabilities, and other factors. However, if you become a permanent resident or Canadian citizen within certain timeframes, you may be eligible for a rebate.
  
  
• Underused Housing Tax (UHT): This is a federal tax on vacant and underused residences in Canada at a 1% rate that applies each year.
  
  
• Property transfer tax: Most provinces charge a tax when property ownership changes hands, typically ranging from 1% to 3% of the purchase price.
  

Ongoing expenses

Don't forget about recurring costs like property insurance, maintenance, utilities, property taxes, and condo fees (if applicable). These expenses can add up quickly, so make sure your budget accounts for them.

The benefits of buying vs renting

Investment potential

Canadian real estate has historically appreciated in value, making it a solid long-term investment if you plan to stay in Canada after graduation or want to maintain property here. Major cities like Toronto, Vancouver, and Montreal have seen consistent property value growth over the decades, even with occasional market corrections. Even if you eventually return to your home country, you can rent out the property and generate passive income while benefiting from long-term capital appreciation.

Stability

Owning your home eliminates the uncertainty of rental increases and provides a stable living situation throughout your studies. You won't have to worry about landlords deciding not to renew your lease or increasing rent beyond your budget at the end of your term. This stability allows you to focus on your education without the stress of potentially having to move or renegotiate rental terms every year.

Building equity

Rather than paying rent that benefits a landlord, your mortgage payments build equity in an asset you own. Each monthly payment reduces your principal balance, meaning you're essentially saving money that stays with you in the form of home equity. Over time, this equity becomes a valuable financial asset that you can leverage for future investments or financial needs.

Rental income

If you purchase a property with multiple bedrooms, you can rent out rooms to other students, helping offset your mortgage costs. This strategy is particularly effective near universities where housing demand is high and students are constantly seeking accommodation. Some homeowners find that rental income from roommates can cover 50-70% of their monthly mortgage payment, significantly reducing their housing burden.

Path to permanent residency 

Demonstrating property ownership in Canada can support your application for permanent residency by showing your commitment to establishing roots in the country. Immigration officers consider various factors when assessing PR applications, and property ownership demonstrates financial stability and long-term investment in Canadian society. While it's not a guarantee, it certainly strengthens your profile as someone who intends to contribute to and remain in Canada.

The risks to consider

Limited flexibility

If your study plans change or you need to relocate, selling a property can be time-consuming and may result in losses if the market has declined. The real estate transaction process typically takes 2-3 months from listing to closing, and you'll incur costs like realtor commissions (usually 5% of the sale price) and legal fees. If you need to move quickly for a job opportunity or family reasons, being tied to a property can become a significant obstacle to your mobility.

Maintenance responsibilities

Unlike renting, you're responsible for all repairs and maintenance, which can be costly and time-consuming. When the roof starts leaking, you can't simply call a landlord, you need to arrange and pay for repairs yourself. Emergency repairs can cost thousands of dollars, and even routine maintenance like lawn care, snow removal, and appliance servicing requires both time and money that students may not have readily available.

Market volatility

Real estate prices can fluctuate, and there's no guarantee your property will appreciate in value. Economic downturns, changes in immigration policy, or local market conditions can cause property values to stagnate or even decline in the short to medium term. If you need to sell during a market downturn, you might end up owing more on your mortgage than the property is worth, a situation known as being "underwater" on your loan.

Upfront costs

The substantial down payment and closing costs can strain your finances, especially when you're already managing tuition and living expenses. Closing costs alone typically range from 1.5% to 4% of the purchase price and include land transfer taxes, legal fees, home inspection costs, and title insurance. Depleting your savings for a down payment might leave you vulnerable to financial emergencies or force you to take on additional debt for unexpected expenses during your studies.

Managing cross-border payments with Pesa

One of the biggest challenges international students face when buying property is transferring large sums of money from their home country to Canada. This can include receiving funds from family for your down payment, or needing to make regular mortgage payments from foreign accounts. International transfers can be expensive, with traditional banks charging high fees and offering poor exchange rates.

This is where Pesa becomes invaluable. Pesa specializes in fast, affordable international money transfers, making it easier for international students to:

• Transfer down payment funds from family members abroad without losing thousands to excessive fees and unfavourable exchange rates
• Make regular mortgage payments from foreign bank accounts efficiently
• Send rental income back to family or investment accounts in your home country
• Receive financial support from parents or sponsors for property-related expenses

Unlike traditional banks that can take 3-5 business days and charge fees of 3-5% per transaction, Pesa offers competitive rates and faster processing times, which is key when you're dealing with time-sensitive property transactions. For students managing finances across borders, this can mean thousands of dollars saved over the course of homeownership.

The bottom line

Can an international student buy a house in Canada? Yes, but it requires careful planning, substantial financial resources, and meeting specific regulatory requirements. Most international students will not qualify to purchase a residential property immediately upon arrival, but those who have been in Canada for several years and have consistently filed taxes may find homeownership within reach.