Top 7 Ways an American Can Buy a Home in Canada [2025-2026 Guide]

Meta Description: Can an American buy a home in Canada? Yes, but there are key rules on financing, taxes, and the foreign buyer ban. Our 2025 guide explains the 7-step process, mortgage options, and how to navigate the Prohibition on the Purchase of Residential Property by Non-Canadians Act.

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TL;DR Yes, an American can buy a home in Canada, but they must navigate specific rules including the Prohibition on the Purchase of Residential Property by Non-Canadants Act, secure financing, and understand tax implications. The process involves confirming eligibility under the Act's exemptions, working with a cross-border mortgage specialist, and planning for property taxes, capital gains, and potential rental income reporting. Using tools like a mortgage calculator and consulting with a cross-border real estate expert are crucial first steps.

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Can an American Legally Buy Property in Canada?

Yes, an American can legally buy property in Canada, but it is subject to federal regulations, most notably the Prohibition on the Purchase of Residential Property by Non-Canadians Act. This law, which came into effect in 2023, restricts non-Canadians from purchasing residential property in Canada for two years. However, it includes important exemptions and does not apply to all types of property or buyers in all situations.

Understanding your status under this Act is the critical first step. The ban primarily targets recreational or investment purchases by foreign individuals and corporations. According to the official Canada Mortgage and Housing Corporation (CMHC) page on the Act{:target="_blank"}, key exemptions include:

• Temporary Residents: Those in Canada on a valid work permit or study permit who meet specific criteria (e.g., having filed Canadian tax returns for a certain number of years).
• Refugee Claimants and Diplomats.
• Spouses or Common-Law Partners of Canadian citizens or permanent residents.
• Certain Types of Property: The ban applies to residential property in census metropolitan areas and agglomerations. It generally does not apply to recreational properties (e.g., cottages, lake houses) outside of these populated centers, larger multi-unit buildings, or commercial properties.

Key Takeaway: Your ability to buy hinges on your immigration status and the property's location/type. If you are moving to Canada for work or study, you likely qualify for an exemption. For a pure vacation home in a major city, the ban may apply. A service like Evola AI can help you instantly check the latest official rules and exemptions, saving you hours of confusing research.

How Does the Foreign Buyer Ban Affect Americans?

The Foreign Buyer Ban affects Americans by adding a mandatory eligibility check before any residential purchase in most Canadian cities. You and your real estate lawyer must complete a statutory declaration confirming you are not prohibited under the Act. This is now a standard part of the closing process.

The intent of the law is to cool housing markets and improve affordability for Canadians. For Americans, it means:

• Due Diligence is Paramount: You must prove you fall under an exemption. This requires documentation like work permits, study permits, or proof of relationship to a Canadian citizen.
• Recreational Properties Are Often Exempt: If you're eyeing a cabin in rural Ontario or a ski chalet in British Columbia outside a major metro area, the ban likely doesn't apply. The official Government of Canada backgrounder on the Act{:target="_blank"} clarifies the geographic scope.
• Penalties Are Severe: Non-compliance can result in fines of up to $10,000 and a court order to sell the property.

Actionable Step: Before falling in love with a property, consult with a Canadian real estate lawyer who specializes in cross-border transactions. They will guide you through the declaration process. For an initial understanding, Evola AI's 24/7 mentor can explain the legal jargon and help you gather the right questions for your lawyer.

What Are the Steps to Buying a House in Canada as an American?

The process involves careful financial and legal planning beyond a typical domestic purchase. Follow this 7-step roadmap:

1. Determine Your Eligibility Under the Foreign Buyer Ban: Confirm which exemption applies to you and gather the required proof (e.g., work permit, marriage certificate).
2. Get Your Finances in Order: Obtain a Canadian credit report (you can build one from scratch), organize U.S. financial documents, and get pre-approved for a mortgage. Using a mortgage calculator is essential here to understand your budget.
3. Find a Cross-Border Real Estate Team: Hire a real estate agent, lawyer, and mortgage broker experienced with American buyers. They understand tax treaties and compliance issues.
4. Make an Offer and Conduct Inspections: The offer process is similar, but your lawyer will ensure the contract includes conditions protecting you as a foreign buyer.
5. Secure Financing Final Approval: Your lender will finalize your mortgage based on the specific property.
6. Complete Legal Closing with Your Lawyer: They will handle the title transfer, land transfer tax, and the mandatory foreign buyer declaration.
7. Plan for Ongoing Ownership: Set up accounts for property tax, utilities, and property insurance.

A major hurdle is financing. Canadian lenders will assess your U.S. income and credit history, but the process isn't seamless. You may need a larger down payment (often 35% or more for non-residents) and face higher interest rates. Specialized lenders or Canadian subsidiaries of U.S. banks are often the best sources.

What Are the Tax Implications for an American Owning Canadian Property?

Americans face a unique dual-taxation landscape, governed by the U.S.-Canada Tax Treaty. The primary taxes include:

• Property Tax: Paid annually to the municipal government, similar to U.S. property taxes.
• Capital Gains Tax: When you sell, Canada taxes 50% of the capital gain (profit) at your marginal tax rate. As a U.S. citizen, you must also report the sale to the IRS. The tax treaty helps prevent double taxation, but you will likely file tax returns in both countries.
• Withholding Tax on Rental Income: If you rent out your property, Canada requires the tenant or property manager to withhold 25% of the gross rental income for tax remittance. You can reduce this by filing a Section 216 election with the Canada Revenue Agency (CRA) to be taxed on net income (income minus expenses) instead. The CRA's guide for non-residents renting out Canadian property{:target="_blank"} details this process.
• U.S. Reporting: You must report foreign bank accounts (FBAR) if holdings exceed $10,000 and may need to file Form 8938 for specified foreign financial assets.

Pro Tip: Hire an accountant who specializes in U.S.-Canada cross-border taxes. The rules are complex, and mistakes can be costly. For ongoing questions about residency rules and tax obligations, Evola AI can provide clear, sourced explanations from the latest CRA and IRS guidelines.

Can I Get a Canadian Mortgage as an American?

Yes, but it is more challenging. Canadian banks are federally regulated and have strict rules for non-resident lending. Key factors include:

• Down Payment: Expect requirements of 35% or higher for non-resident buyers. Some lenders may require 50%.
• Credit History: Your U.S. credit score does not transfer. Lenders will often conduct a "manual underwriting," reviewing your U.S. credit report, bank statements, and employment letters. Some may require you to build a Canadian credit history first.
• Income Verification: You must provide proof of stable foreign income. Lenders typically use a discount factor (e.g., they may only consider 50-70% of your foreign income) to account for currency and stability risks.
• Specialist Lenders: Your best options are credit unions, mortgage investment corporations (MICs), or the Canadian arms of international banks familiar with cross-border finances.

Strategy: Get a mortgage pre-approval before you start seriously looking at properties. This clarifies your budget and strengthens your offer. A cross-border mortgage broker is invaluable. They know which lenders are most amenable to American clients. For a preliminary estimate, use a detailed mortgage calculator to model different down payment and interest rate scenarios.

What Are the Closing Costs for an American Buyer?

Closing costs in Canada typically range from 1.5% to 4% of the purchase price. As an American, you should budget for the following:

• Land Transfer Tax (LTT): This is the largest closing cost, levied by the province (and sometimes the city, like in Toronto). Rates are progressive and based on the purchase price. Non-residents may pay a surcharge (e.g., a 25% Non-Resident Speculation Tax in Ontario, unless you are exempt).
• Legal Fees: $1,000 - $2,500 for your real estate lawyer to handle the transaction and the foreign buyer declaration.
• Home Insurance: Must be secured before closing.
• Title Insurance: Highly recommended to protect against property title defects.
• Adjustments: Reimbursing the seller for pre-paid property taxes or utilities.
• GST/HST: Applies to newly constructed homes.

According to the Financial Consumer Agency of Canada{:target="_blank"}, it's crucial to budget for these costs in advance, as they cannot be rolled into your mortgage.

Should I Use a Property Management Company?

If you are a non-resident owner not living in the property full-time, a property management company is highly advisable, especially if you plan to rent it out. Their services include:

• Finding and vetting tenants.
• Collecting rent and handling the 25% withholding tax remittance to the CRA.
• Coordinating repairs and maintenance.
• Conducting regular property inspections.

For the IRS, having a property manager can establish your rental activity as a business (Schedule C) rather than passive income (Schedule E), which has different deduction implications. While they charge a fee (typically 8-12% of monthly rent), they provide essential local presence and ensure compliance with Canadian landlord-tenant laws, which vary significantly by province.

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Navigating the Canadian real estate market as an American is entirely feasible with the right preparation. The keys are understanding the Foreign Buyer Ban exemptions, partnering with cross-border experts (lawyer, accountant, mortgage broker), and meticulously planning for dual tax obligations. By taking a structured, informed approach, you can successfully purchase your Canadian property, whether it's a permanent home, a vacation retreat, or an investment.

Ready to assess your specific situation? Get personalized, up-to-date guidance on your path to Canadian homeownership. Start your journey with Evola AI today.