A low credit score doesn’t rule out buying a home in Canada, but it changes which lenders will look at your application, how much you need to put down and what you pay. This page covers the score thresholds that matter, the options open at each level, and how to rebuild credit so the next mortgage costs less. It is one of our guides to mortgages outside the standard bank route.
The credit scores lenders look for
Canadian credit scores usually run from 300 to 900, and a higher score is better. Lenders set their own cutoffs and don’t publish one number, but Equifax describes how lenders generally read the score bands:
| Equifax band | Score | How lenders generally see it |
|---|---|---|
| Excellent | 760 and up | Lower-risk borrower |
| Very good | 725 to 759 | Lower-risk borrower |
| Good | 660 to 724 | Acceptable, lower-risk borrower |
| Below good | Under 660 | May be less likely to qualify for better loan terms |
| Poor | Generally below 560 | More likely to have difficulty getting credit or better terms |
One hard line sits inside those bands: mortgage insurance. For a CMHC-insured purchase, at least one borrower or guarantor needs a credit score of 600 or more; CMHC may use other ways to judge creditworthiness for a borrower with no credit history. Below that score, a purchase with less than 20% down is usually off the table, which is why a down payment of 20% or more is the starting point for most bad-credit mortgages. The CMHC insurance rules cover the insurer’s other criteria.
Options by credit level
| Your situation | Where applications usually go | What to expect |
|---|---|---|
| Score in the good range, a few blemishes | Banks and credit unions | Standard rates, possibly with questions about the blemishes |
| Score below good but at or above the insurance minimum | Credit unions, some banks, B-lenders | Insured mortgage still possible; a bank may decline or ask for more down |
| Score below the insurance minimum, or a recent consumer proposal or bankruptcy | B-lenders | Usually 20% or more down, a higher rate, often a lender fee, a shorter term |
| Turned down by B-lenders, or a very recent discharge | Private lenders and mortgage investment corporations | Lending based mostly on equity, short terms, the highest cost |
Credit unions. Some credit unions underwrite by hand and weigh the whole file rather than the score alone. Membership is usually tied to where you live or work.
B-lenders. Trust companies and smaller banks that specialise in borrowers banks decline. The B-lender mortgage guide compares them with banks and private lenders and lays out the usual path back to a bank.
Private lenders and MICs. They lend mostly against the equity in the property, often for a one-year term with interest-only payments, so they work as a bridge while credit recovers rather than as a long-term mortgage.
For named lenders and how they compare on minimum score and down payment, see our ranking of the best mortgage lenders for bad credit. Current rates move with the market; today’s mortgage rates give the bank benchmark that alternative lenders price above.
What a lower score costs
The rate premium is the biggest cost. The example below uses illustrative rates, not current quotes, to show how much a two-point gap adds.
On a $400,000 mortgage amortized over 25 years, a 5% rate costs $2,326 a month and a 7% rate costs $2,802 a month, a difference of $475 a month or $5,703 a year. Payments use the semi-annual compounding Canadian fixed-rate mortgages are quoted with.
Lender fees, a possible broker fee and a shorter term (with renewal costs sooner) add to that. Moving to a lower rate at renewal, once credit has recovered, is how most borrowers recover the difference.
What causes bad credit, and how long it lasts
| Cause | How long it usually stays on your credit report |
|---|---|
| Late or missed payments | Up to 6 years |
| Accounts sent to collections | Up to 6 years |
| Consumer proposal | About 3 years after it is completed |
| First bankruptcy | 6 to 7 years after discharge |
| High balances on credit cards | Reported monthly, so the effect fades once balances come down |
| Many credit applications | Hard inquiries show for a while and weigh less over time |
Each bureau (Equifax and TransUnion) keeps its own file, and the exact retention can vary by bureau and province. Our credit score guides explain how scores are built.
How to rebuild credit for a mortgage
| Step | Why it helps |
|---|---|
| Pull both your Equifax and TransUnion reports and dispute errors | A wrong late payment or a debt that isn’t yours can be corrected |
| Pay every bill on time | Payment history is the main way a score recovers |
| Bring card balances well below their limits | Balances are reported monthly, so lower utilisation shows up quickly |
| Deal with collections accounts | Paid accounts look better to a lender reading the file, even before they drop off |
| Use a secured credit card if you have no active credit | Builds a record of on-time payments |
| Hold off on new credit applications | Avoids fresh hard inquiries before a mortgage application |
A typical plan runs over 12 to 24 months: correct the reports in the first month, then build a run of on-time payments and lower balances, and have a mortgage broker reassess the file once the score has moved.
Other ways to strengthen an application
A bigger down payment. More equity lowers the lender’s risk. At 20% or more down, insurance is no longer needed and B-lenders become an option; a larger share opens better private-lender terms.
A co-signer or guarantor. A family member with strong credit can sign on, but takes on full responsibility for the debt. Our guide to co-signing a mortgage explains the roles and the risks for the person who signs.
A broker. Most B-lenders and many private lenders only deal through brokers, so a broker who places alternative mortgages can show the full range of options for a bad-credit file.
If buying isn’t possible yet, rent-to-own is sometimes marketed as a bridge, though it carries its own costs and risks.
Buying now or waiting
| If… | The trade-off |
|---|---|
| Your score is just below the good range | A few months of on-time payments and lower balances may move you into bank territory and save the rate premium |
| Your score is below the insurance minimum and you have 20% down | A B-lender mortgage now costs more, but a renewal after the score recovers can bring the rate down |
| You have a very low score and little equity | Private lending is the costliest option; rebuilding first may cost less than a year of private-lender fees |
| Rents in your area cost about as much as owning would | Running the numbers at a B-lender rate, plus fees, shows whether buying now still pays |
Sources
The figures and rules on this page come from these sources, last checked against them between September 25, 2026 and October 2, 2026. How we check facts.
- Bank of Canada: Conventional 5-year mortgage rate (data series)
- Bank of Canada: Conventional 5-year mortgage rate (data series)
- Bank of Canada: Conventional 5-year mortgage rate (data series)
- Bank of Canada: Data table
- CMHC: CMHC Purchase
- equifax.ca: What Is a Good Credit Score in Canada? | Equifax CA
- Financial Consumer Agency of Canada: Credit report and score basics
- Government of Canada: You Owe Money—Bankruptcy Discharge and its Consequences for the Bankrupt