A low credit score changes which lenders will look at a mortgage application and what the mortgage costs, but it rarely closes every door. This page sorts the lender options by credit-score band, shows what each step down costs, and lays out the ladder back to bank rates. The wider question of how to get approved with bad credit (what causes it, how long it lasts and how to strengthen an application) is covered in the guide to getting a mortgage with bad credit, and the rest of our lender and broker guides cover the lenders themselves.
Lender options by credit score
| Credit score | Lenders that usually consider it | Cost compared with a bank | Down payment | What else lenders look for |
|---|---|---|---|---|
| 680 and up | A-lenders: banks, monolines, credit unions | Market rates | Insured mortgage possible with less than 20% down | Documented income, debt ratios within limits |
| 650 to 679 | Some A-lenders, most B-lenders | Market rates to somewhat higher | Insured or conventional, depending on the lender | Compensating strengths: higher income, low debt, a larger down payment |
| 600 to 649 | Mainly B-lenders | Higher rate, often a lender fee | Usually 20% or more, since most B-lender mortgages are uninsured | Reasonable income and an explanation of the credit problems |
| 550 to 599 | Selected B-lenders | Higher again, plus a lender fee | 20% to 25% or more | Strong equity, proof of income, signs the problem is behind you |
| Below 550 | Mainly private lenders | Highest rates, with lender and broker fees | Often 25% to 35% equity or more | Equity in the property and a clear exit plan |
The bands are typical, not rules: each lender sets its own cut-offs, and the score is read alongside income, debts, the down payment and what caused the credit problems. Lender minimums are compared in the guide to the credit score needed for a mortgage. For an insured mortgage, the insurer’s minimum applies as well:
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.A buyer who doesn’t meet that, with no co-borrower or guarantor who does, can’t get a CMHC-insured mortgage (see mortgage default insurance), so the usual route is a conventional mortgage with at least 20% down. Rates change weekly, so the bank benchmark is on the current mortgage rates page rather than in this table.
B-lenders that work with bruised credit
B-lenders are the usual option for scores from the mid-500s to the high 600s. They charge more than banks and often add a lender fee, and most take applications only through mortgage brokers; what they are is explained in the guide to B-lender mortgages. The lenders below are profiled, with their programs, in the B-lender roundup.
| Lender | What it is | Often considered for |
|---|---|---|
| Equitable Bank (EQ Bank) | CDIC-member bank; residential mortgages only through mortgage brokers | Limited credit history, self-employed, newcomers |
| Home Trust | Alternative lender | Bruised credit and alternative income |
| ICICI Bank Canada | Bank with a newcomer program | Thin Canadian credit history after arriving within the last five years |
| Bridgewater Bank | Schedule I bank owned by the Alberta Motor Association; mortgages through a network of brokers | Near-prime borrowers in Western Canada |
| Community Trust | Trust company | Lower scores and files other B-lenders decline |
Beyond the score, B-lenders want to know what caused the credit problems (a job loss, separation or illness reads differently from ongoing overspending), whether the issue is resolved, and that the income can carry the payments.
Private lenders for very low credit
When B-lenders decline, usually because of a score below about 550, an active consumer proposal or a very recent bankruptcy, private lenders and mortgage investment corporations lend mainly on the equity in the property, for short terms (often one year) at the highest cost. Named MICs, typical terms, red flags and exit plans are in the guide to private mortgage lenders, and how a MIC raises and lends its money is explained in the guide to mortgage investment corporations. Legitimate lenders take their fees from the mortgage advance; a request for a fee before approval and funding is a warning sign.
What a lower score costs
On a $400,000 mortgage over 25 years, with illustrative rates for each tier (not quotes):
| Scenario | Rate | Monthly payment | Interest over 5 years | Extra interest vs the A-lender |
|---|---|---|---|---|
| A-lender (score 700+) | 4.89% | $2,301 | $91,501 | None (the benchmark) |
| B-lender (score around 600) | 6.89% | $2,775 | $130,143 | $38,642 |
| B-lender (score around 550) | 7.89% | $3,025 | $149,574 | $58,073 |
Payments use semi-annual compounding, the convention for Canadian fixed-rate mortgages. Lender fees come on top: a B-lender fee of 1% on this mortgage would be $4,000. Private mortgages are usually one-year, interest-only loans, so they are costed per year in the private lender guide rather than over five years here.
The ladder back to bank rates
A common approach is to take the best mortgage available now and use the term to rebuild credit, so the next renewal or refinance moves up a tier.
Step 1: place the mortgage
- A broker who places B-lender and private mortgages regularly can show offers from several lenders.
- The prepayment and renewal terms matter as much as the rate, because the plan is to leave at the end of the term.
Step 2: rebuild credit during the term
| Action | When | Why it helps |
|---|---|---|
| Pay every bill and the mortgage on time | Throughout | Payment history carries the most weight in a credit score |
| Use a secured credit card lightly and pay it in full | From the start | Adds recent positive history |
| Keep balances well below limits | Throughout | High credit utilization drags a score down |
| Keep older accounts open | Throughout | A longer credit history helps |
| Apply for new credit only when needed | Throughout | Each application adds a hard inquiry |
| Deal with collections and check reports for errors | Early in the term | Errors can be disputed with Equifax and TransUnion |
The steps in more detail, and how quickly scores recover, are in improving your credit score for a mortgage.
Step 3: move up a tier at renewal
| Starting point | Usual next step | Typical time |
|---|---|---|
| Private lender (score below 550) | B-lender | 1 to 2 years |
| B-lender (score 550 to 649) | A stronger B-lender or an A-lender | 2 to 3 years |
| B-lender (score 650 to 679) | A-lender | 1 to 2 years |
Each step down the rate ladder lowers the payment, and moving lenders at renewal usually means a new application, an appraisal and legal costs.
Step 4: back with an A-lender
With a score in the high 600s or better, a clean recent payment history and documented income, a borrower is back in A-lender territory: bank and monoline rates, insured mortgages with a smaller down payment where the purchase qualifies, wider prepayment privileges and the penalty terms of a prime mortgage. The best mortgage lenders in Canada compares them.
Common credit situations and the lenders that fit
| Situation | Lender type usually used | What to expect |
|---|---|---|
| Score around 620, one late payment two years ago | A-lender, with an explanation | A standard rate is possible if income and debt ratios are strong |
| Score around 580, collections paid | B-lender | A higher rate and usually 20% or more down |
| Active consumer proposal, payments up to date | B-lender if the proposal is nearly complete, otherwise private | Private terms are short and costly |
| Bankruptcy discharged within the last two years | Usually private | Short term, a large equity requirement; see a mortgage after bankruptcy |
| Bankruptcy discharged more than two years ago, credit rebuilding | B-lender | A good chance of approval with 20% down |
| Several maxed-out cards, score around 540 | B-lender if debt ratios work, otherwise private | Paying balances down first can move the file up a tier; see credit card debt and mortgage approval |
Self-employed borrowers with credit problems face both hurdles at once; self-employed mortgages and stated-income programs cover the income side, and lenders also read bank statements and spending history closely on these files. Newcomers with no Canadian history are a separate case, covered in mortgages for newcomers.
Choosing a broker for a bad-credit file
Not every broker places B-lender and private mortgages. The ranking of the best mortgage brokers in Canada covers the national brokerages; for a bad-credit file, points worth asking about:
- Experience with alternative files: how many B-lender and private mortgages they arrange.
- Lender access: whether they submit to several B-lenders, not just one.
- Private lender relationships: which MICs and private lenders they have worked with.
- Fees in writing: the lender fee, any broker fee and legal costs before you commit; how mortgage brokers get paid explains when a borrower pays a broker fee.
- No payment before funding: a broker’s fee, where one applies, is normally paid from the mortgage advance.
Related pages
Sources
The figures and rules on this page come from these sources, last checked against them between September 29, 2026 and October 5, 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
- bridgewaterbank.ca: Bridgewater Bank
- CMHC: CMHC Purchase
- eqbank.ca: Mortgage Products