Financing Your US Investment Property for Canadians

Whatever your reasons for wanting to invest in a property in the United States, with some 142 million homes south of the border, you’re bound to find an attractive and affordable option to suit you.

Better still, so far as the US government is concerned, there are no restrictions for Canadian citizens wanting to purchase real estate in America. With that in mind, here’s what you should know about buying and financing an investment property in the US.

Why invest in a US property?


Despite a ten-year purchasing low, Canadian buyers were still responsible for investing in 8800 residential properties (4.2 billion dollars’ worth) in the US in 2021—making ours the largest country of origin for foreign buyers of US property.

There are lots of good reasons why Canadian investors consistently seek out real estate opportunities in America, including:

Affordability

As recently as spring 2022, a standard house cost almost twice as much in Canada as it did in the US.

The desire to own (and rent out) a vacation home

Canadians looking to escape the winter months will often buy a US vacation property they can both occupy and rent out in their absence (a growing number of Canadian snowbirds are even unlocking the value in their US vacation homes by refinancing or getting a home equity line of credit).

The chance to profit from a short or long-term investment

Some Canadian investors aim to turn a profit by purchasing an affordable American property and either renovating and flipping it—or renting it out and then selling it when real estate prices rise.

Whether your aim is to generate a return through rental income, appreciation, or both, it’s important that you do your due diligence before finding and funding your US investment property.

What to consider before buying a US investment property


The idea of investing in a property in the United States can feel a little overwhelming for first-time buyers. So to help get you started, here are 3 key things you should consider before purchasing a US investment property.

1. Choosing the right location.

Although Florida, Arizona, and California are the most popular areas with Canadian home buyers, it’s wise to weigh factors besides just climate when researching US real estate markets, including:

  • Your investment budget
  • The local cost-of-living
  • Regional rental demand and resale values for different property types (detached family homes vs condominiums, for example)

Don’t forget to also check potential usage or zoning restrictions if you’re planning to rent out your property.

2. Understanding your tax obligations.

It’s important to thoroughly understand the tax implications attached to:

  • Buying your property. As a Canadian citizen, you’ll be required to pay regular property taxes just like any American home owner
  • Renting out your property. Rental income you earn from a vacation property may be taxed in both the US and Canada
  • Selling your property. You’ll likely need to pay a US withholding tax when selling your property—and you may experience both US and Canadian taxation on any capital gains

There are also potential tax consequences when gifting or passing on a US property.

3. Getting professional help.

It’s essential that you seek legal, tax, and financial advice to ensure you understand the ins and outs of owning (and disposing of) a US investment property. You should also do your best to work with a real estate agent experienced in international sales transactions when buying your home.

How to finance your US property purchase


Unless you’re in the position to make an all-cash deal, you’ll likely need to finance your US property purchase by getting a US mortgage.

As a Canadian investor, you can apply for property funding from:

  • An American bank or financial institution. Look for a US lender that caters to foreign nationals
  • A Canadian bank or lender. Find a financial organization that operates in the US or that facilitates US mortgage loans

In most cases, you’ll find that working with a Canadian lender makes for a more efficient application process, since they can usually approve your mortgage without the need for a US employment, residency, or credit history.

What to expect from the financing process


Because US sellers and their agents will typically want to see proof of pre-approval before working with you, it’s important to get pre-approved for a mortgage before you start property shopping.

That said, you can expect to encounter:

  • Mortgage rates of about 6%-8% working with a Canadian bank

Milo is a financial technology company that specializes in working with global consumers interested in a U.S. mortgage. Apply for a mortgage!

  • Origination (loan application) fees of about 1%-3% or 3%-5%, respectively

Applying for a US mortgage will also mean submitting the proper documentation to support your application.

Among other things, you may need to show your:

  • Passport and proof of residency
  • Credit and employment history
  • Income tax assessments and down payment verification

You can expect fewer document requirements, however—and a faster transaction overall—if you work with a direct, digital lender like Milo. While offering the same home loan rates, it typically takes 30 days or less to close a US mortgage with Milo versus the 60+ days required by most banks.

As a lender specializing in US mortgages for Canadian citizens, Milo makes it easy to apply for financing, get your pre-approval letter, pay for a property appraisal, submit your documentation, and close your property purchase entirely online.

Plus, not only does Milo make both amortizing and interest-only loans available to Canadians, they offer mortgages for investment properties held solely, jointly, or by a corporation.

Bottom Line

You don’t need to be planning a move to the US to buy and own a passive (non-business) investment property south of the border: you can purchase a house or condo as a non-resident, and remain a citizen and taxpayer in Canada. You also don’t require legal documentation (such as a visa) or residency status to spend as many as six months out of every twelve at your property. That means you can both invest in a US home with the intention of earning a profit—and avoid paying rent should you choose to stay at that property in some capacity during the year.

Frequently Asked Questions About Financing a US Investment Property


Can a Canadian citizen buy an investment property in the USA?

Yes. Since there are no restrictions on foreign ownership of real estate, Canadian citizens residing in either the US or Canada can both buy and spend time at an investment property in the United States.

Can I get a Green Card if I buy a house in the US?

Because the act of buying a house in the US does not grant Canadians any special immigration or residency status, it also doesn’t automatically entitle you to a Green Card. On the upside, Canadian residents don’t require a Green Card to purchase a property in the US.

How long can you stay in America if you own a property?

Regardless of whether you own property in America or not, Canadian visitors can generally stay in the US—for pleasure reasons, and without a visa—for up to six months (182 days) during any consecutive 12-month period. Those six months can be back-to-back or spread over multiple visits.

Can a Canadian own rental property in the US?

Yes—Canadians can own rental property in the US. But while there are no restrictions around generating rental income from your property, you will need to apply for an individual taxpayer identification number (ITIN), report your rental income and expenses, and file a US tax return. Although it’s best to consult with an accountant, tax, or financial advisor first, investing in US real estate offers portfolio diversification and a hedge against fluctuations in Canadian currency.

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Leanne Armstrong

Leanne Armstrong is a HubSpot-certified freelance content writer specializing in business, technology and finance. As a former entrepreneur with a background in accounting and social psychology, she writes for a wide range of globally recognized organizations. Her work has appeared in publications like Forbes, Huffington Post and CanadianSME Magazine.

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