A Comprehensive Guide for Canadians Buying Property in the US

In the past ten years, Canadian real estate prices have gone up to wazoo, for lack of a better term. That wouldn’t be such an issue if the salaries have risen to match the current market trends, but they haven’t. Just to give you an example of what we’re talking about, an average house in Toronto in 2010 was around C$400,000. Now, it’s above C$1,200,000. More on that point, the average salary in Toronto was around C$50,000 in 2010 and is now close to C$58,000. So, if you are a Canadian buying house in the USA, here is everything you need to know. In case you want to see the average house cost in the USA, we also wrote about that.

This trend of extreme property price growth and almost stagnating salaries is one of the reasons that more than half a million Canadians have chosen to purchase property in the US, since 2010. In fact, Canadian citizens are one of the most prolific buyers of US real estate. In 2023 alone, Canadian nationals have collectively spent over $6,6 billion on US property. Most of that money went into single-family homes, vacation homes, and various types of rental properties. 

So, if you’re a Canadian looking to buy US property, you’re in the right place! Whether you want to buy a primary residence and move from Canada to the US, or are looking to purchase a vacation home or a rental property, you’ll find a lot of useful information in this guide.

Can Canadians Buy Property in USA?

Yes, they can. Almost all foreign nationals can purchase property in the US, including Canadians. In the past 15 years, around half a million Canadian citizens have bought real estate in the US. They purchased vacation homes, short and long-term rental properties, and main residences. 

The process of purchasing and owning a property in the US as a Canadian is not that much more complicated than it is for US citizens. The main difference is the required documentation (which we’ll discuss below) and some additional taxes that Canadians have to pay if they choose to sell their US property (because of FIRPTA taxes). Apart from that, the whole endeavor of purchasing US real estate is pretty much the same for Canadians, as it would be for anyone else. It could be argued that it’s even easier for Canadians than for other foreigners, because of various US-Canada treaties and overall good relationships between the two nations.

Where Should a Canadian Buy a House in the USA?

There are a lot of reasons why Canadians would want to buy property in the US. But, most of them can be boiled down to the following 3 categories:

• Buying property as an investment — A lot of Canadians choose to invest in US real estate because the numbers are generally better and there are more opportunities to make a good deal. Just as an example, the size of the entire Canadian real estate market is estimated at around 27 billion dollars. In comparison, the US real estate market is worth around 2,53 trillion dollars. This means that the US market is more than 92 times larger than the Canadian market. So, if you are a Canadian Buying House in the USA – you are definitely not alone.
• Buying a vacation home — Because of the wonderful weather and huge amounts of sunny days per year (on average between 230 and 300), a lot of Canadians buy property in Florida and Arizona. In fact, these two states are the most popular amongst Snowbirds looking to buy vacation houses.
• Buying a primary residence — Canadians who want to buy their main residence in the US are also looking to move there on a permanent basis. This is usually due to more and higher-paying job opportunities, lower taxes (in states like Florida), and sometimes even the lower cost of living. 

We can help you find your ideal US property!

Are Real Estate Prices Lower in the USA Than in Canada?

The price of an average property is much higher in Canada than it is in the US. And that is one of the key reasons why Canadians buy real estate in the States. In 2023, an average Canadian home was around $620,000. In contrast, the value of an average US house was close to $440,00. This difference of almost $200,000 (or $180,000 to be more accurate) is why a lot of Canadian nationals choose the US real estate market.  

Where in the US Do Canadians Buy Property?

The most popular destination for Canadians buying properties in the US, is by far, the state of Florida. More than 50% of all Canadian buyers in 2023, have bought property in this sunny state. Apart from Florida, other popular locations for Canadians, in no particular order, include:

• The state of Arizona;
• The state of California;
• The state of Louisiana,
• The state of Montana;
• The state of South Carolina.

Canadian Communities in the US

Current estimates suggest that there are more than 800,000 Canadians living as permanent residents in the US. Keeping that large number in mind, it’s no wonder that there are a lot of Canadian communities in the US. Canadian citizens can be found all across the US, but most of them choose to live in the following places:

• New York Metropolitan area (around 45,000 Canadians);
• Los Angeles Metropolitan area (around 42,000);
• Miami and Fort Lauderdale Metro areas (around 33,000);
• Phoenix Metro area (around 31,000);
• Tampa Metropolitan area (around 20,000).

What Documentation Do Canadians Need to Buy Property in US?

For the most part, Canadians buying property in the US will require the following documentation:

• Valid passport;
• Canadian citizenship or residency documents;
• Valid NEXUS card (for those Canadian citizens that are a part of the trusted-travelers NEXUS program);
• Social Security Number (SSN);
• Individual Taxpayer Identification Number or ITIN (for Canadians who can’t get an SSN)
• Valid US visa;
• Various financial records, such as job history, credit and loan reports, earnings reports, and similar.

4 Essential Tips for a Canadian Buying House in the USA

Here are some tips that you should definitely keep in mind when buying US real estate as a Canadian.

Tip 1 —  Find the Answer to the “Why” Question 

Before you do anything else, ask yourself — Why do I want to buy property in the US? The answer is much more important than you might think and can have huge implications on the entire process of buying US real estate. 

One reason is — all the different types of mortgages available to you depending on the answer. For example, if you’re looking to buy a rental property, DSCR loans or Foreign National Mortgage Loans might just do the trick to help you finance it. Yes, their interest rates are a bit higher, and they do come with larger down payment requirements, but are far easier to get and require much less paperwork than other types of conventional loans. On the other hand, if you’re buying a primary residence, and want to make a permanent move from Canada to the US you might want to consider FHA loans that have lower interest rates but have requirements such as a valid US Visa, US job and credit history.

The answer to the question “Why” will also affect the location of the property you’re looking to buy. If you’re purely an investor, your decision-making will be influenced by the numbers (what are the costs and how much money you can make in comparison). Alternatively, if you’re looking to move to the US, that might not be a consideration at all. In that case, your decision-making could be influenced by the weather, local culture, living costs, job opportunities, and more.

So, whatever your case may be, remember, before you even begin looking at properties, answer the WHY question. 

Tip 2 — Find the Ideal Location as a Canadian Buying House in the USA

Once the “Why” question is out of the way, you can now focus on finding your preferred location (and property). Now, there are two main ways you can go about this:

• You can do it by yourself (DIY method)
• Hire a real estate agent with experience working with international clients 

There are pros and cons to each of the two methods. If you choose to do everything by yourself, you will probably save some money, but you will have to invest a lot of time figuring out all the minutiae of the US real estate market. On the other hand, if you hire a real estate agent (preferably one with international experience), yes, you’ll spend money on commission, but you will get to work with someone experienced and who understands US real estate. 

Ultimately, the final choice you make should be based on — how much you know about the markets in the US. If you’re knowledgeable, there’s no reason why you shouldn’t give it a go by yourself. Yes, it will take up a lot of your time, but, there’s something to be said about doing it single-handedly. And, if your knowledge about the US real estate market is limited, your best bet would be to hire a broker and have them work for you. Let them do all the grunt work of finding your ideal property.

Whatever decision you choose to make, it’s completely up to you! For now, let’s move on to the next tip. 

Need help finding property in the US? Book a free call and learn how we can connect you with real estate agents experienced in dealing with international buyers.

Tip 3 — Prepare Documents 

Preparing all the necessary documentation and ensuring everything is on the up and up, can take quite a bit of time. Nevertheless, it’s something you have to do. In fact, remember to double (or even triple) check every document and piece of paper that comes through your hands. Even a small clerical error or a mistype can set you back weeks (sometimes even months). So, take your time preparing the documentation you’ll need to buy US property as a Canadian. And, if you need a refresher, scroll up to the “What Documentation Do Canadians Need to Buy Property in US?” heading.

Tip 4 — Have the Down Payment Ready

If you’re looking to make an all-cash purchase, you can simply skip this one. If you’re not, make sure to get the down payment ready. How much money you’ll need for it will depend on the price of the property and the type of US mortgage loan you choose. You can expect to pay 15-25% of the property’s value as a down payment. 

For example, if the property you’re interested in is worth $400,000, make sure you have at least $60,000 ready to go. 

Canadian Buying House in the USA – Financing Options

Apart from an all-cash purchase, there are various ways Canadians can finance properties in the US. The most common financing options and mortgages for Canadians buying property in the US are:

• Foreign national mortgage loans — Documentation for this type of loan is pretty basic and includes having a valid Canadian passport, Visa, SSN, or ITIN, and some form of income or job history/verification. The usual down payment for this mortgage type is between 20-25% of the property’s value. Foreign national mortgage loans are mostly used for purchasing investment and rental properties, although they can be used to refinance or increase equity in a primary residence.
• DSCR loans — These types of non-QM mortgage loans are usually offered by private lenders, but some banks offer them as well (such as JPMorgan Chase). The down payment is a bit higher when compared to regular mortgage loans and is usually around 20-25% of the property’s purchase price. DSRC are investor-only loans, meaning they can only be used to purchase rental properties (residential or commercial).
• The Federal Housing Administration (FHA) loans — The down payment for these types of mortgage loans is relatively low, and it can be only 3,5%, but that comes with a caveat — a higher credit score requirement. To get this low of a down payment, a borrower needs to have a credit score of at least 580, and even that is not a guarantee that they will get approved. Another downside is that FHA loans are only available to US residents (US citizens and those with a valid US visa). 
• Conventional loans – These mortgages have lower interest rates but have more requirements than most other types of loans. First and foremost, they are only available to US citizens (those who have a US passport). Additionally, to get approved for a conventional loan, a borrower will need a credit score of at least 620, a US job history, and an SSN (social security number), amongst other things. 

How Can Canadian Citizens Buy Property in USA?

There are two methods that Canadian nationals can utilize to both register and buy property in the US. They are:

• Opening an LLC and buying a home through it.
• Using their legal name to buy a house.

Both of these methods are equally viable, depending on what you’re looking to do. If you want to move to the US and buy a primary residence, then there’s nothing wrong with buying a house under your name. On the other hand, if you’re looking to purchase a rental property, you should consider opening an LLC to buy and manage said property. If you do that, not only can you get certain tax benefits, but you can also protect yourself and your assets from liability and various types of legal issues and can also safeguard your anonymity.