Can I Get a Mortgage with Bad Credit?
Yes! Discover your mortgage options even with poor credit scores
Quick Answer: Yes, You Can Get Approved
Even with bad credit, damaged credit, or a low credit score, you can still qualify for a mortgage in Canada. Alternative lenders and private mortgage solutions look beyond your credit score to consider your home equity, income, and overall financial picture. With the right approach, homeownership remains within reach.
What Credit Score Do I Need for a Mortgage?
Traditional banks typically require a credit score of 650 or higher for conventional mortgages. However, alternative mortgage solutions are available for borrowers with:
Credit Score Ranges
- Below 600: Private lender options
- 600-649: Alternative A lenders
- 500-599: Equity-based lending
- Below 500: Home equity solutions
What Matters Most
- Home equity (minimum 20%)
- Ability to make payments
- Property value and location
- Exit strategy for repayment
Calculate Your Borrowing Power
See how much you could qualify for based on your home equity
Use Our CalculatorHow Do Bad Credit Mortgages Work in Canada?
Bad credit mortgages, also called subprime mortgages or alternative mortgages, work differently than traditional bank mortgages. Instead of focusing primarily on your credit score, lenders evaluate your overall financial situation.
Key Differences from Traditional Mortgages
Higher Interest Rates
Expect rates between 8.29% - 13.29% depending on your situation, compared to 4.89%–5.49% for prime borrowers through Schedule B lenders and credit unions. Rates as of April 1, 2026. Subject to OAC.
Equity Requirements
Most alternative lenders require at least 20% equity in your home. If you're purchasing, this means a 20% down payment minimum.
Shorter Terms
Terms typically range from 6 months to 2 years. This gives you time to rebuild your credit and refinance to better rates.
Lender Fees
Expect broker fees (1-2% of loan) and lender fees. While higher than traditional mortgages, they provide access when banks say no.
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What Causes Bad Credit and Can I Still Qualify?
Many Canadians face credit challenges. Understanding your situation helps determine the best mortgage solution:
Recent Bankruptcy or Consumer Proposal
Can you qualify? Yes! After discharge: 2 years for bankruptcy, immediately for consumer proposals with 20% down. Private lenders often approve sooner.
Late or Missed Payments
Can you qualify? Absolutely. Recent payment issues are manageable with alternative lenders, especially if you have strong equity.
Collections or High Debt Ratios
Can you qualify? Yes. Private lenders focus on equity and exit strategy rather than outstanding collections.
Self-Employment Income Issues
Can you qualify? Definitely. Many self-employed borrowers use alternative stated income programs or private lending solutions.
Frequently Asked Questions About Bad Credit Mortgages
How fast can I get approved for a bad credit mortgage?
Approval can happen in as little as 24-48 hours with private lenders. Traditional alternative lenders may take 1-2 weeks. The process is much faster than conventional mortgages because less documentation is required.
Will applying hurt my credit score even more?
No. We perform a soft inquiry for pre-qualification which doesn't affect your credit. Only the final approval requires a hard inquiry, and we only proceed with your permission.
Can I refinance to better rates later?
Yes! Most borrowers use alternative mortgages as a bridge. After 12-24 months of on-time payments and credit rebuilding, you can refinance to traditional lenders at much lower rates.
What documents do I need for a bad credit mortgage?
Requirements vary by lender, but typically: proof of identity, property appraisal, proof of income (pay stubs or bank statements), and property tax statements. Much simpler than traditional mortgages.
Is there a minimum credit score for private mortgages?
Private lenders don't have a minimum credit score requirement. They focus on your home equity (typically 20-25% minimum) and ability to make payments. Even scores below 500 can be approved.
How much does a bad credit mortgage cost?
Interest rates range from 7.99% to 12.99%. Expect 1-2% broker fee and potential lender fees (1-2%). While higher than traditional mortgages, these costs provide access to financing when you need it most.
Ready to Move Forward?
Don't let bad credit hold you back. Speak with a specialist who understands your situation and can find the right solution.
Sami Juneja
Mortgage Specialist
With over a decade of experience in alternative lending, Sami has helped hundreds of Canadians secure financing despite credit challenges. His approach focuses on finding solutions, not just pointing out problems.