Getting a Mortgage with Bad Credit in Canada
Having bad credit doesn't mean homeownership is impossible. Canada has a tiered lending system that provides options for borrowers at every credit level.
Understanding Credit Score Tiers in Canada
| Credit Score | Rating | Typical Lender | Expected Rate |
|---|---|---|---|
| 760+ | Excellent | A Lenders | Best rates |
| 680-759 | Good | A Lenders | Competitive |
| 620-679 | Fair | A- Lenders | Slightly higher |
| 550-619 | Poor | B Lenders | 1-2% higher |
| Below 500 | Bad | Private Lenders | 5-10%+ |
A Lenders vs B Lenders vs Private Lenders
A Lenders (Traditional Banks)
Requirements:
- Minimum credit score: 680
- Proven income documentation
- Standard debt ratios
B Lenders (Alternative Lenders)
Requirements:
- Minimum credit score: 500-550
- More flexible income verification
- Larger down payments (20%+)
Private Lenders
Requirements:
- Focus primarily on property equity
- Credit score less important
- Minimum 25-35% down payment
The Bruised Credit Path to Homeownership
Year 1: B Lender Mortgage
- Accept higher rate for now
- Focus on rebuilding credit
- Make all payments on time
Year 2: Credit Improvement
- Credit score should improve 50-100+ points
- Continue perfect payment history
Year 3: Refinance to A Lender
- Apply for A lender refinance
- Enjoy lower rates
Frequently Asked Questions
Can I get a mortgage with a 500 credit score?
Yes, through B lenders or private lenders. Expect 20-30% down payment and higher rates.
How long after bankruptcy can I get a mortgage?
Typically 2 years after discharge for B lenders, 3+ years for A lenders.
Contact us to explore your options based on your credit situation.
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