For Canadian citizens looking to invest in a second home or investment property in the U.S., the purchase transaction itself is fairly simple and straightforward, particularly when paying "all cash". Other than some forms to complete, all you will need is a valid passport. You may also want to consider opening an account with a US bank prior to close of escrow as you will need U.S. funds to close on the property.
If you need to finance a portion of the purchase price, the process can get a bit more complicated and time consuming. The two key issues from a lender’s perspective, for someone who resides mainly in Canada, is overcoming risk of flight and lack of credit history in the US. For example, a good credit history in Canada will not automatically create a good credit rating in the US.
While there are still many US lending institutions that deal with Canadian clients on a regular basis, financing options for Foreign Nationals in the US has become more restricted and the loan process taking much more time. One reason, in addition to flight risk and lack of credit history, is due to these loans needing to be retained in-house (as a "Portfolio" loan) with the lending institution rather than sold on the secondary market. Some Canadians are choosing to look first for a Canadian bank that is also established in the US as they may be able to use your Canadian credit history to give you a credit rating in the US.
If you will be financing a portion of the purchase price, it is highly recommended you get prequalified with a lender in the US prior to looking for property. In addition to showing a Seller you are prequalified, should you decide to make an offer, this will also help you understand the lender requirements, estimate your payments and determine what you can afford prior to making an offer. Some Realtors will require a pre-qualification statement from your lender, prior to showing properties. It is also advisable to talk to a Canadian income tax advisor, experienced in dealing with US taxes, particularly if you are considering acquiring rental income property in the US.
Different lenders have different requirements. In the current lending environment, lender may require a 30% to 45% down payment for foreign investors. In addition, some lenders require a US Bank account be opened and a minimum 6 months mortgage payment reserve deposited prior to final approval. Some form of verification of above will be required.
Our firm works with several loan brokerage services that have the required expertise to assist Canadian buyers with their financing needs. There may be additional hoops to jump through if financing is involved, however we have the necessary experience and know-how to get this done timely and efficiently.