Want a Mortgage But Have Poor Credit? – We Can Help
How to Get a Mortgage Even If You Have Poor Credit
Can You Get a Mortgage in Canada with Poor Credit? Yes — Here’s How
For many Canadians, the dream of homeownership represents a significant milestone in their lives, often symbolizing stability, security, and a sense of belonging. Owning a home is more than just having a place to live. It is also an investment in your future. It helps you build equity over time.
However, for individuals with less-than-ideal credit scores, the path to securing a mortgage can seem daunting and filled with obstacles. It doesn’t have to be that way, we have provided details on how you can obtain a mortgage with poor credit.
A credit score is a numerical representation of an individual’s creditworthiness, which lenders use to assess the risk of lending money. In Canada, credit scores usually range from 300 to 900. Most mortgage lenders often see scores above 650 as acceptable. If your credit score is below this level, you might feel like getting a mortgage is hard. This can lead to feelings of frustration and hopelessness, especially when the desire to own a home is strong.
Understanding that having bad credit does not mean you cannot get a mortgage in Canada is important. Even though it takes extra effort and planning, there are still good options for people with bad credit.
In conclusion, a poor credit score can make it harder to get a mortgage in Canada. However, it is not an impossible obstacle. With careful planning and a proactive approach to improving your credit, you can still reach your goal of owning a home. Remember, the journey may require patience and persistence, but the rewards of owning a home can be well worth the effort.
What Is Poor Credit in Canada?
In Canada, credit scores range from 300 to 900. Here’s a quick breakdown:
- Excellent: 760–900
- Good: 725–759
- Fair: 660–724
- Poor: Below 660
Lenders usually want a score of 680 or higher. However, you can still qualify with a lower score. This is especially true if you find the right lender and can show other strengths.
1. Understand Your Mortgage Options in Canada
A-Lenders (Large Financial Institutions & Credit Unions): These lenders have the best rates. However, they usually want strong credit (about 680 or higher), stable income, and a good financial history.
B-Lenders (Alternative Lenders): These lenders assist borrowers with low credit scores, even as low as 550. They also help those who are self-employed or have other financial problems. The rates are slightly higher, but terms can be reasonable.
Private Lenders: If banks and B-lenders say no, private lenders are a last-resort option. They’re more flexible with credit but often charge higher interest rates, and may require a larger down payment (up to 25–30%).
2. Use Government Programs Designed to Help
Even if your credit isn’t perfect, you might qualify for helpful programs like:
- Home Buyers’ Plan (HBP): Lets you borrow up to $60,000 from your RRSP tax-free to use as a down payment.
- GST/HST New Housing Rebate: Helps reduce the tax burden if you’re buying a newly built home.
These programs do not look at credit scores directly. However, they can help ease your financial stress and boost your chances of getting a mortgage approved.
3. Strengthen Your Application with Compensating Factors
If your credit is poor, lenders in Canada will look at the full picture. You can increase your chances by showing:
- A larger down payment (20% or more is ideal)
- A stable job and income for at least 2 years
- Low debt-to-income ratio (DTI)
- History of consistent rent or utility payments
4. Rebuild Your Credit Strategically
If you’re not in a rush, taking 6–12 months to improve your credit can help you get a better rate and more options. Here’s how:
- Always pay at least the minimum on credit cards on time
- Keep your credit utilization below 30%
- Avoid opening or closing multiple credit accounts at once
- Check your credit report (through Equifax or TransUnion Canada) for errors and dispute them
5. Work With a Mortgage Broker Who Understands Poor Credit
In Canada, mortgage brokers often have access to both A- and B-lenders, and can advocate for you even with a subpar credit score. They can also explain the fine print on higher-risk loans and find lenders who will consider your full financial picture.
Avoid Risky Lending Practices
Some private or unregulated lenders may take advantage of borrowers with poor credit. Watch out for:
- Extremely high interest rates (double digits)
- Large upfront fees
- Short loan terms with balloon payments
- Vague contract language
Always read the fine print and never sign anything under pressure.
What Echo Mortgage Has To Offer;
- Access to a variety of Lenders that approve all credit types
- Structured plan to help improve credit in the short term
- Dedicated clients to our program will improve their credit over 100 points by their next renewal date
Final Thoughts: Yes, You Can Get a Mortgage with Poor Credit in Canada
Having a low credit score may make your mortgage journey more complex—but it’s far from impossible. You can work toward owning a home in your own way. This can include saving for a bigger down payment, using a broker, or improving your credit over time.
- Patience, preparation, and the right team make all the difference.
