Canadian Mortgage Options for Florida Property: Complete Financing Guide

Canadian banks do not provide mortgages for US property purchases, including Florida real estate. Canadian residents buying Florida property must obtain financing from US lenders, which typically requires 25-30% down payment (versus 20% for US citizens), higher interest rates (0.25-0.75% premium), extensive documentation including US credit history or alternative verification, and proof of foreign income. Current US mortgage rates hover around 6.5-7% for foreign nationals, with loan amounts capped at 70-75% loan-to-value ratio. Alternative options include cash purchases (common among Canadians), private/portfolio lenders accepting higher rates for easier qualification, or home equity lines of credit against Canadian property to fund Florida purchases.

For Canadians purchasing Miami real estate, understanding cross-border financing is crucial to budgeting properly and avoiding surprises. The combination of higher down payments, currency exchange considerations, and complex documentation requirements means you'll need significantly more liquid capital than purchasing property in Canada.

This guide explains why Canadian mortgages don't work for US property, how to obtain US financing as a Canadian, what documentation you'll need, alternative financing strategies, and how to structure your purchase for optimal financial outcomes.

Why Canadian Banks Won't Finance US Property

Banking Regulations:

Canadian banks face regulatory and practical barriers to lending on US property:

Jurisdictional Issues:

• Canadian banks can't easily foreclose on US property
• Different legal systems complicate enforcement
• US state laws vary (Florida vs California vs Texas)
• Cross-border legal action is expensive and complex
• Title and lien priority systems differ

Currency Risk:

• Mortgage in CAD but property value in USD
• Exchange rate fluctuations create risk for both parties
• If CAD weakens, your CAD mortgage doesn't change but property value in CAD drops
• Banks can't easily manage this currency mismatch

Regulatory Compliance:

• Canadian banks must comply with US regulations for US lending
• Complex licensing and compliance requirements in each state
• Cost of compliance doesn't justify market size
• Easier to avoid US mortgage market entirely

Appraisal and Valuation:

• Canadian banks lack US market expertise
• Can't easily appraise Florida property from Toronto
• Don't have relationships with US appraisers
• Property inspection complexities

Servicing Challenges:

• How to collect payments across border
• Handling defaults and foreclosures internationally
• Property insurance requirements differ
• Property tax collection systems different

What About Your Existing Canadian Mortgage?

Some Canadians consider borrowing against Canadian property to buy in Florida:

Home Equity Line of Credit (HELOC):

• Borrow against your Canadian home equity
• Use funds to buy Florida property cash
• HELOC interest rates: Prime + 0.5-1% (currently ~7-8%)
• Available if you have equity and income to qualify
• This works and is commonly used

Refinancing Canadian Mortgage:

• Increase your Canadian mortgage
• Use cash-out for Florida purchase
• Subject to qualification and loan-to-value limits
• Current Canadian mortgage rates: 5-6%
• This works but requires re-qualifying

Second Mortgage on Canadian Property:

• Higher interest than first mortgage
• Typically 7-10% rates
• Shorter terms
• More expensive but possible

Key Point: You're not getting a "Canadian mortgage for Florida property" – you're getting a Canadian mortgage secured by Canadian property and using the proceeds to buy Florida property for cash.

US Mortgage Options for Canadian Buyers

Foreign National Mortgage Programs:

US lenders offer specialized programs for non-US citizens:

Who Qualifies:

• Canadian citizens (or any foreign nationals)
• With or without US credit history
• With documented foreign income
• Meeting minimum down payment requirements
• Passing background/identity verification

Typical Terms:

Down Payment:

• Minimum: 25-30% (versus 20% for US citizens)
• Some lenders: 30-35% for no US credit history
• Larger down payment may get better rates
• Investment properties: Often 30-40% minimum

Interest Rates:

• Foreign national premium: 0.25-0.75% above standard rates
• Current range: 6.5-7.5% (30-year fixed)
• Adjustable rates: Starting around 6%
• Higher credit quality = better rates

Loan Amounts:

• Loan-to-value (LTV): 70-75% maximum
• Some lenders cap at $2-3 million
• Jumbo loans (over ~$766,550): More restrictive
• Portfolio lenders more flexible on amounts

Terms:

• 30-year fixed most common
• 15-year fixed available
• 5/1, 7/1 ARM options
• Interest-only options rare

No Prepayment Penalty:

• Most US mortgages allow prepayment
• Can pay off early without penalty
• Refinance when rates drop
• Different than many Canadian mortgages

Documentation Requirements:

Identity and Legal Status:

• Valid passport
• Visa (if applicable, though not required for mortgages)
• Proof of Canadian residency
• Employment authorization not required (you're not working in US)

Income Verification:

For Employed Canadians:

• 2 years of tax returns (Canadian T1)
• 2 years of employment letters
• Recent pay stubs (last 2-3 months)
• Bank statements (2-3 months)
• Employment verification letter

For Self-Employed:

• 2 years of personal tax returns
• 2 years of business tax returns
• CPA letter verifying income
• Business license/registration
• Bank statements (business and personal)

Currency Conversion: All Canadian income must be converted to USD:

• Use current exchange rate
• Some lenders use average rate
• Lender will document conversion rate used
• Income verified in USD equivalent

Credit History:

If You Have US Credit:

• US credit report pulled
• Score 680+ ideal
• 720+ for best rates
• History of US credit accounts helps

If No US Credit:

• Alternative credit verification
• Canadian credit report (Equifax Canada)
• Bank statements showing payment history
• Utility payment history
• Letter of credit from Canadian bank
• Some lenders waive credit requirements with larger down payment

Down Payment Source:

• Must document source of funds
• Bank statements showing funds
• If gift: Gift letter from donor
• If sale of property: Sale documentation
• Cannot be borrowed (must be your funds)

Property Documentation:

• Purchase contract
• Property appraisal (lender orders)
• Property insurance quote
• HOA documents (if applicable)
• Title search

The Application Process:

Step 1: Pre-Qualification (2-3 weeks):

• Submit initial documentation
• Lender reviews income, assets, down payment
• Preliminary approval issued
• Know your budget before shopping

Step 2: Property Selection:

• Find property you want to buy
• Make offer subject to financing
• Contract signed

Step 3: Formal Application (3-4 weeks):

• Complete application
• Submit all documentation
• Appraisal ordered
• Title search conducted
• Underwriting review

Step 4: Final Approval (1-2 weeks):

• Underwriter approves loan
• Clear to close issued
• Final conditions met
• Closing scheduled

Step 5: Closing:

• Sign mortgage documents
• Wire down payment and closing costs
• Receive keys
• Mortgage recorded

Total timeline: 6-8 weeks from application to closing.

Costs and Fees:

Closing Costs (2-5% of purchase price):

• Loan origination: 0.5-1%
• Appraisal: $400-600
• Credit report: $50-100
• Title insurance: 0.5-1%
• Title search: $200-400
• Attorney fees: $1,000-2,000
• Recording fees: $200-500
• Prepaid property taxes: Variable
• Prepaid insurance: First year premium
• HOA transfer fees: $100-500

Example on $500,000 purchase:

• Down payment (30%): $150,000
• Closing costs (3%): $15,000
• Total cash needed: $165,000

Lenders Who Work with Canadians

Types of US Lenders:

International Mortgage Specialists:

• Focus on foreign national lending
• Understand Canadian documentation
• Experienced with currency conversion
• Streamlined process for Canadians

Examples:

• JMAC Lending
• Bank of America (International)
• Regions Bank
• TD Bank US (Canadian connection)
• BNC National Bank

Portfolio Lenders:

• Keep loans on their books (don't sell to Fannie/Freddie)
• More flexible underwriting
• Can create custom loan structures
• Often higher rates but easier approval

Local Florida Banks:

• Community banks in Miami
• Understand local market
• May have foreign buyer programs
• Build relationship for future needs

Mortgage Brokers:

• Shop multiple lenders for you
• Know which lenders work with Canadians
• Can find best rates/terms
• Handle documentation coordination

How to Find the Right Lender:

Start with Referrals:

• Ask your Florida real estate agent
• Other Canadian property owners
• Cross-border financial advisors
• Online forums (Canadian Snowbirds groups)

Compare Multiple Lenders:

• Get quotes from 3-4 lenders
• Compare rates AND terms
• Consider ease of process
• Check reviews from other Canadians

Questions to Ask:

1. Do you regularly work with Canadian buyers?
2. What's your minimum down payment for foreign nationals?
3. What interest rate can you offer?
4. What documentation do you need?
5. Do you accept Canadian credit reports?
6. What's the typical timeline?
7. What are your fees?
8. Can I see sample documentation requirements?
9. Who will be my point of contact?
10. Can you provide Canadian client references?

Red Flags:

• Lender unfamiliar with foreign nationals
• Vague about requirements
• Promises unrealistic rates
• Pushy or unprofessional
• Can't provide references
• Hidden fees in fine print

Alternative Financing Strategies

Cash Purchase:

Most Common for Canadians: ~50% of Canadian buyers pay cash for Florida property.

Advantages:

• Stronger negotiating position
• Faster closing (2-3 weeks vs 6-8 weeks)
• No mortgage approval risk
• No interest payments
• Simpler documentation
• Lower closing costs (no loan fees)

Disadvantages:

• Large capital requirement
• Lose leverage (borrowing is cheap money)
• Money tied up in property vs investments
• Opportunity cost (could earn returns elsewhere)
• All risk in single asset

When Cash Makes Sense:

• You have liquidity available
• Want simplest process
• Property is investment (not stretching budget)
• Mortgage rate higher than your investment returns
• You're older and prefer no debt

HELOC on Canadian Property:

Using Canadian Home Equity:

How It Works:

1. Apply for HELOC on Canadian home
2. Borrow needed amount
3. Buy Florida property cash
4. Repay HELOC over time

Current HELOC Rates:

• Prime + 0.5-1%
• Approximately 7-8%
• Variable rate (changes with Bank of Canada rate)
• Interest-only payments possible

Advantages:

• Access Canadian home equity
• Buy Florida property cash (stronger offer)
• Lower rate than US foreign national mortgage
• Flexible repayment
• Canadian lending (simpler for you)

Disadvantages:

• Canadian property at risk if you default
• Currency risk (CAD debt, USD asset)
• Variable rate (could increase)
• Two properties leveraged

Maximum Borrowing:

• Up to 65% of Canadian home value
• Combined with mortgage can't exceed 80%
• Must qualify based on income

Example:

• Canadian home value: $800,000
• Existing mortgage: $200,000
• Available HELOC: $520,000 - $200,000 = $320,000
• Can borrow up to $320,000 for Florida purchase

Refinance Canadian Mortgage:

Cash-Out Refinance:

How It Works:

1. Refinance Canadian mortgage for higher amount
2. Take difference as cash
3. Use cash for Florida purchase
4. Single Canadian mortgage payment

Advantages:

• Lower rate than HELOC
• Fixed rate option
• Larger amount than HELOC
• Single payment to manage

Disadvantages:

• Must re-qualify for full mortgage amount
• Breaking existing mortgage may have penalties
• Closing costs on refinance
• Higher monthly Canadian payment

Example:

• Current Canadian mortgage: $300,000 at 3%
• Home value: $900,000
• Refinance to: $600,000 at 5.5%
• Cash out: $300,000 (minus penalties and fees)
• Use for Florida purchase

Seller Financing:

When Seller Carries Mortgage:

Rare but occasionally available:

• Seller acts as lender
• You make payments to seller
• Typically shorter term (5-10 years)
• Higher rates (7-10%)
• Larger down payment (30-50%)
• Balloon payment often required

When Available:

• Seller owns property free and clear
• Motivated seller
• Unique property (hard to finance)
• You have strong financial position but documentation challenges

Private/Hard Money Lenders:

Short-Term Bridge Financing:

Characteristics:

• Asset-based (focus on property value, less on your financials)
• Higher rates (8-12%+)
• Points (2-5% upfront fee)
• Shorter terms (1-3 years)
• Easier approval

When to Use:

• Short-term need until you secure better financing
• Complicated documentation situation
• Time-sensitive purchase
• Plan to refinance to conventional loan

Not Recommended for Long-Term:

• Rates too high for permanent financing
• Use only as bridge to better financing

Partner/Joint Purchase:

Buying with US Citizen:

• Easier financing with US citizen co-borrower
• Better rates and terms
• Lower down payment
• Shared ownership and costs

Considerations:

• Legal partnership agreement essential
• Exit strategy documented
• Ownership percentage clear
• What happens if relationship changes

Currency and Tax Considerations

Exchange Rate Impact:

Budgeting for Forex:

Florida property priced in USD, you're paying from CAD:

Example Purchase:

• Property price: $500,000 USD
• Exchange rate: 0.72 CAD/USD
• Cost in CAD: $694,444 CAD

If CAD Weakens:

• Exchange rate drops to 0.70
• Same property now costs: $714,286 CAD
• $20,000 CAD more expensive

If CAD Strengthens:

• Exchange rate rises to 0.75
• Same property costs: $666,667 CAD
• $28,000 CAD cheaper

Timing Strategy: For timing considerations, see CAD to USD currency guide for real estate.

Currency Transfer:

Avoid Bank Wires:

• Bank exchange rates: Often 2-3% markup
• Wire fees: $50-100 per transfer
• On $500,000: Costs $10,000-$15,000

Use Foreign Exchange Specialists:

• Knightsbridge FX
• OFX
• Wise (TransferWise)
• XE.com

Benefits:

• Better exchange rates (0.5-1% vs 2-3%)
• Lower fees
• On $500,000: Save $7,500-$12,500
• Can lock in rate for 30-90 days

Mortgage Payment Currency:

If You Get US Mortgage:

• Payments in USD
• Must convert CAD to USD monthly
• Exchange rate fluctuations affect payment amount in CAD
• Budget for forex risk

Example:

• Monthly mortgage: $2,500 USD
• At 0.72 CAD/USD: $3,472 CAD
• At 0.70 CAD/USD: $3,571 CAD
• $99 CAD more if CAD weakens

Tax Implications:

Interest Deductibility:

On US Mortgage:

• Can deduct mortgage interest on US tax return
• Only matters if you're US tax resident (substantial presence test)
• Most snowbirds not US tax residents

On Canadian HELOC/Mortgage:

• If HELOC used for investment property: Interest may be deductible in Canada
• Consult Canadian accountant
• Tracked separately from personal-use portion

Capital Gains:

When You Sell:

• Capital gains tax in US (15-20% federal)
• Capital gains tax in Canada (50% inclusion rate)
• Tax treaty prevents double taxation
• Foreign tax credit in Canada for US taxes paid

Rental Income:

If you rent the property:

• Report rental income on US return (1040NR)
• Report rental income on Canadian return
• Deduct expenses (mortgage interest, property tax, management, etc.)
• Foreign tax credit prevents double taxation

Work with cross-border tax specialist familiar with Canadian-US property ownership.

Choosing Your Financing Strategy

Decision Framework:

Choose US Mortgage If:

• Want to maximize leverage
• Comfortable with US lending process
• Have strong financial documentation
• Plan long-term ownership
• Want to preserve Canadian liquidity

Choose Canadian HELOC If:

• Have Canadian home equity available
• Want easier approval process
• Prefer variable Canadian rate
• Want cash purchase advantages
• Comfortable with two leveraged properties

Choose Cash Purchase If:

• Have liquidity available
• Want simplest process
• Negotiating power important
• Avoid debt preference
• Can afford opportunity cost

Choose Refinance Canadian Mortgage If:

• Want fixed rate
• Comfortable with higher Canadian mortgage
• Breaking existing mortgage makes sense
• Prefer single debt to manage

Steps to Secure Financing:

3-6 Months Before Purchase:

1. Assess Your Financial Position:

   • Available down payment
   • Income documentation
   • Canadian credit report
   • US credit history (if any)
2. Explore Options:

   • Contact US mortgage lenders
   • Check Canadian HELOC availability
   • Consider cash purchase feasibility
   • Get preliminary quotes
3. Get Pre-Approved:

   • Choose financing route
   • Submit documentation
   • Receive pre-approval letter
   • Know exact budget

During Property Search:

1. Shop with Confidence:

   • Pre-approval shows you're serious
   • Know exactly what you can afford
   • Can close quickly

Under Contract:

1. Finalize Financing:

   • Submit formal application
   • Provide all documentation
   • Stay responsive to lender requests
   • Meet all deadlines
2. Prepare for Closing:

   • Arrange currency transfer
   • Wire down payment before closing
   • Review closing documents
   • Coordinate with attorney

Common Mistakes to Avoid:

Underestimating Cash Needed:

• Down payment PLUS closing costs PLUS reserves
• 30% down + 3% closing + 6 months reserves
• On $500,000: $150,000 + $15,000 + $25,000 = $190,000

Not Shopping Lenders:

• Rates vary significantly
• 0.5% rate difference on $350,000 = $100/month = $36,000 over 30 years

Poor Currency Timing:

• Not watching exchange rates
• Using bank wire vs forex specialist
• Costs thousands unnecessarily

Inadequate Documentation:

• Incomplete tax returns
• Missing employment letters
• Unclear source of funds
• Delays approval or causes rejection

Not Understanding Terms:

• Prepayment penalty (rare but check)
• Adjustable rate reset terms
• Foreign transaction clauses
• Full recourse vs non-recourse

Getting Expert Help

Assemble Your Team:

Cross-Border Mortgage Broker:

• Specializes in Canadian-US financing
• Shops multiple lenders
• Understands documentation
• Manages process

Cross-Border Accountant:

• Tax implications both countries
• Optimal ownership structure
• Deductibility questions
• Reporting requirements

Real Estate Attorney:

• Review mortgage documents
• Florida real estate law
• Closing representation
• Title issues

Financial Advisor:

• Overall financial strategy
• Debt vs cash decision
• Portfolio implications
• Currency hedging

Foreign Exchange Specialist:

• Optimal currency timing
• Rate locking
• Large transfer management
• Ongoing payment conversion

The financing strategy you choose impacts your overall investment returns, tax situation, and peace of mind. Work with professionals who understand cross-border real estate to optimize your Florida property purchase.

Pink Miami works with Canadian buyers regularly and can connect you with lenders, attorneys, and advisors experienced in Canadian-US transactions. Contact us to discuss your Florida real estate goals and financing options.