Bad Credit Mortgage Canada: Can You Get Approved? (2026)

Having bad credit doesn't automatically disqualify you from homeownership in Canada. There are legitimate pathways to getting a mortgage with a low credit score — but they come with trade-offs. The lower your score, the more you'll pay in interest, fees, and down payment. Here's the complete picture.

Bad Credit Mortgage Payment Estimator

See estimated monthly payments based on your credit profile.

Home Price ($)

Down Payment ($)

Credit Score Range

Amortization (years)

Mortgage amount:

Estimated rate:

Est. monthly payment:

Minimum Credit Score for a Mortgage in Canada

The minimum credit score requirement depends on which type of lender you approach:

Major banks (A lenders): Typically require 650–680+, with best rates at 720+
B lenders (trust companies, mono-line lenders): Will often approve 550–649 with compensating factors
Private lenders: May approve below 550, sometimes as low as 400–450, but at significantly higher rates (7–15%+)

Types of Mortgage Lenders in Canada

A Lenders Best rates, strictest requirements

Big Six banks (TD, RBC, Scotiabank, BMO, CIBC, National Bank) and major credit unions. They offer the lowest rates but require strong credit (650+), stable employment, and a manageable debt-to-income ratio. Most require a minimum 5% down payment plus CMHC insurance if under 20%.

B Lenders Higher rates, more flexible

Also called alternative lenders or trust companies. Examples include Home Trust, Equitable Bank, and MCAP. They work with borrowers who have credit issues, non-traditional income, or self-employment. Rates are typically 1–3% higher than A lenders. Most require at least 20% down.

Private Lenders Last resort, expensive

Private mortgage investment corporations (MICs) and individual investors. They can approve almost anyone with sufficient equity, but rates of 8–15%+ are common, plus lender and broker fees of 1–3% of the mortgage. Private mortgages are short-term (1–2 year terms) meant as a bridge to rebuilding credit.

How Much Down Payment Do You Need?

With bad credit, expect lenders to require a larger down payment as protection against default risk:

A lender (650+ score): 5% minimum (with CMHC insurance)
B lender (550–649): 20% typically required (no CMHC)
Private lender (below 550): 25–35% often required

Use our down payment calculator to figure out how much you need to save.

Other Factors Lenders Consider

Credit score is just one piece. Lenders also weigh:

Income and employment stability: 2+ years at the same employer or in the same field
Debt-to-income ratio: Most lenders want GDS below 39% and TDS below 44%
Down payment source: Your own savings look better than gifted or borrowed down payments
Property type and location: Rural or unusual properties may require larger down payments

Mortgage Broker Tip: If you have bad credit, a mortgage broker is almost always worth using. They have access to dozens of lenders including B lenders that don't advertise directly to consumers. Their fee is typically paid by the lender, not by you.

The Path to Better Mortgage Terms: Build Your Credit First

If you're not in a rush to buy, the highest-return strategy is to spend 1–2 years improving your credit score before applying for a mortgage. Going from a 600 score to a 720 score can save you 1–2% in interest rate — which on a $500,000 mortgage translates to $5,000–$100 per year.

Read our guide to improving your credit score for a step-by-step action plan.

Using a Guarantor or Co-Borrower

If a parent or spouse has strong credit, they can co-sign or co-borrow on the mortgage. This allows the application to use their credit profile, potentially qualifying you for A lender rates. Note that the co-signer is fully responsible for the mortgage if you default — it's a serious commitment that should not be entered lightly.

Rebuild Your Credit Before You Apply

KOHO's Credit Building feature reports payments to Equifax every month, helping you build the score you need for a better mortgage. Plus get a $100 cash bonus with code 45ET55JSYA.

Get $100 with KOHO →

Bad Credit Mortgage Canada