A Guide On How To Get A Mortgage With A Low Credit Score

Woman is using tablet pc, pressing on virtual screen and select "Credit report".

When you’re trying to buy a house, the first thing you need to know is your credit score. You can choose among various banks, credit unions, and other lenders based on your credit score. 

You are more likely to have difficulty getting a mortgage with a low credit score, but it’s not impossible. The following information will offer you tips for getting a mortgage with bad credit in Canada and, equally important, what pitfalls you might face if you do so.

How to get a mortgage with bad credit in Ontario?

If you are looking for a guide on the best private mortgage lenders in Ontario, below are the steps to follow;

Get your down payment ready

Some lenders will consider clients with credit scores of less than 680, provided they meet certain criteria, such as having a 20% down payment. Credit scores of 620 or 640 are okay with some lenders. An insurer will allow you to take out an ‘insured mortgage,’ requiring less than a 20% down payment.

Find the alternatives

Consider a private or alternative lender if your credit score is between 500 and 600. Unlike big banks and credit unions, these lenders do not offer traditional mortgages. There might also be additional fees. There will be fees even if a person has a credit score of at least 680. 


A lender fee can be added to the mortgage balance for people with not-so-great credit who go to a private lender or alternative lender. The lender fee generally costs 1% to 2% of the mortgage amount.

Find a co-signer for yourself

You can qualify for a mortgage with a poor credit history if you have a co-signer or guarantor on hand because lenders view this as a way of reducing the risk of mortgage default. 

The downside of a bad credit loan

Although a mortgage broker can often get borrowers with bad credit better interest rates than they could on their own, it will still be higher than a loan for a borrower with good credit. 


The fact that mortgage brokers are often paid a finder’s fee by lenders, making their services accessible to clients, is not the case for bad credit mortgages. Check with your broker to see if they charge any additional fees. 


Ask what they charge before agreeing to anything. There are usually other fees associated with bad credit mortgages, such as legal fees and property appraisal fees.

Wrapping up

It is not easy to obtain a mortgage with bad credit in Canada. When you have bad credit, your interest rates will be higher, you’ll often have to put 20 percent down, and you’ll likely lose your house if you default on your payments. 


If you want more favorable mortgage terms, you should work on improving your credit score. You can also consider getting a mortgage co-signer or working with a mortgage broker to secure a better rate.

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