Overview
You can get a mortgage in Canada with bad credit, but your options, rates, and requirements will differ from those available to borrowers with good credit. Traditional banks and A-lenders usually require higher credit scores, so most Canadians with bad credit turn to alternative (B-lenders) or private lenders for mortgage solutions.
What is Considered “Bad Credit” in Canada?
- Credit scores in Canada range from 300 to 900
- Bad credit: Generally, a score below 560 is considered poor; traditional lenders often require at least 660–680
- Some alternative lenders may consider applicants with scores as low as 500 (or even lower in specific cases)
How to Get a Mortgage with Bad Credit
Key Points
- Traditional lenders (Big Six banks) rarely approve applicants with bad credit
- Alternative and private lenders are more flexible but charge higher interest rates
- You may be required to provide a larger down payment (often 20% or more)
- Using a mortgage broker specializing in bad credit increases your chances—they have access to lenders willing to work with lower credit scores
Typical Requirements
- Minimum credit score: Many B-lenders/private lenders accept 500+, but requirements vary
- Down payment: Often 20% or higher, depending on the lender and risk profile
- Proof of income and employment: Still required, even for private lenders
- Higher interest rates: Expect rates significantly above those offered by major banks
Example: Credit Score Categories & Mortgage Options
| Credit Score Range | Lender Type | Likelihood of Approval | Typical Interest Rate |
|---|
| 700+ | Major Banks (A) | High | Best available |
| 660–699 | Major Banks (A) | Moderate to High | Competitive |
| 560–659 | B-Lender/Alt lender | Moderate | Higher than banks |
| 500–559 | B/Private Lender | Possible | Much higher |
| Below 500 | Private Lender | Unlikely/Case-by-case | Highest |
Best Mortgage Lenders for Bad Credit
There are numerous alternative and private lenders in Canada specializing in bad credit mortgages. Many require you to apply through a broker, and their offerings are available nationwide or in select provinces.
| Lender Type | Provinces Available | Minimum Credit Score | Broker Required |
|---|
| B Lenders | Nationwide | 500–580 | Often |
| Private Lenders | All provinces (some exceptions) | No minimum (case-by-case) | Often |
| Credit Unions | Province-specific | 600+ | Sometimes |
Pros and Cons of Bad Credit Mortgages
Pros:
- Path to homeownership despite bad credit
- Opportunity to rebuild credit over time
- Flexible qualification criteria
Cons:
- Substantially higher interest rates
- Larger down payment required
- Higher fees and stricter terms
Provincial Considerations
- Most alternative and private lenders operate in all provinces, but some restrict business in Quebec or the Atlantic provinces.
- Regulations and property transfer taxes vary by province, potentially affecting closing costs.
Steps to Take
- Check your credit score and review your credit report.
- Improve your credit if possible before applying (pay down debt, fix errors, make payments on time).
- Consult a mortgage broker specializing in bad credit—they can access a broader range of lenders.
- Prepare a larger down payment and ensure you have proof of stable income.
- Compare rates and terms from multiple lenders to find the best deal for your situation.
theratefinder is a comprehensive platform that helps Canadians find and compare mortgage rates for residential, commercial, and construction loans. They offer a sophisticated multi-step application process with competitive rates from top Canadian lenders. Start your application at theratefinder.ca/onboarding for a personalized mortgage solution.
Summary
- You can get a mortgage in Canada with bad credit, but usually not from major banks.
- Alternative and private lenders are your best options, but expect higher rates and stricter requirements.
- Work with a broker, save for a larger down payment, and consider steps to improve your credit over time for better terms at renewal.
- Use platforms like theratefinder to compare options and start your mortgage application process.
Next Steps:
- Check your credit and financial situation
- Consider ways to improve your score
- Connect with a broker or use theratefinder to compare and apply for a bad credit mortgage tailored to your needs