Different mortgage loans are offered to customers based on their income and credit profile, down payment, and other factors.
Is It Possible to Get a Mortgage with Bad Credit in Canada?
While many brick-and-mortar banks consider customers with poor credit to be high risk, there are lenders who are willing to extend loans to clients, regardless of their payment history. One option is to contact online bad credit mortgage lenders or finance services in your area. They generally look at factors such as income range, type of employment, and whether the applicant is a first time buyer.
How Do I Qualify for a Mortgage in Canada if I Don’t Have Good Credit?
There are secured loans that are specifically designed for borrowers with less-than-perfect credit. One of the most important factors that lenders look into is proof of sufficient income. Financial institutions want to make sure that borrowers earn enough to make timely payments. Obviously, many lenders also require a higher down payment because they deal with risky clients. Customers with stellar credit are often offered competitive terms, and the down payment can be as low as 5 – 10 percent. At the same time, borrowers with poor credit may have to put 15 – 20 percent down. The higher the down payment, the better the chances of getting approved for a mortgage loan. A reliable co-signer with a solid payment history may be required as well.
Be Realistic – Buy What You Can Afford
Since the down payment is a certain percentage of the property’s value, you may want to set a price range based on the maximum down payment you can afford. Your debt to income ratio is also an important consideration, and a high DTI shows that you may be unable to meet your monthly payments. Look at your housing expenses as well and factor in costs such as cooperative, condominium, or homeowners association fees, hazard insurance, property taxes, interest charges, and principal amount. Lenders also look at your total debt ratio. They factor in recurring payments such as alimony and child support, student and consumer installment loans, vehicle leases and loans, and credit cards.
Online Bad Credit Mortgage Lenders in Canada
Canadian Mortgage Finder – http://www.canadianmortgagefinder.com/
This is a good place to look for a bad credit mortgage if you can put at least 15 percent down. The terms offered depend on whether you are a repeat or new home buyer. There are different options available, including open, variable, fixed rate, and special mortgages. Rates vary based on the loan term and range from 2.89 percent on a 1-year mortgage to 4.49 percent on a 10-year loan. The rate on variable mortgages is set at 2.45 percent.
Family Lending – https://www.familylending.ca/lending/poor-credit.html
This is a lending service that specializes in bad credit mortgages and offers rates ranging from 2.3 percent for a variable rate mortgage to 4.39 percent for a 10-year closed loan. Fixed rate mortgages usually go with higher rates but give customers a sense of security. The interest rate is based on the loan type while amounts vary from less than $50,000 to $500,000 and higher. There is an option to get preapproved. Borrowers with poor credit are asked to provide proof of professional appraisal as well as proof of income.
Canada Lend – http://www.canadalend.com/Services/BadCredit.aspx
This is yet another loan provider that offers mortgages to borrowers with average and bad credit. Customers are offered fixed rate loans and terms range from 1 to 5 years. The rate on a 2-year mortgage can be as low as 2.49 percent while 3-year mortgages feature a slightly higher rate of 2.59 percent. Borrowers with different credit profiles qualify, even applicants who have consumer proposals, bankruptcies, and tarnished credit. Clients who are in a consumer proposal and those who are new to credit are also likely applicants. To apply for a loan, clients provide details such as their SIN, current mortgage balance, residential value and status, reason for loan and amount required, outstanding debts, type of employment, and income.
Mortgage Brokers in Canada
Mortgage brokers can be helpful in many ways as they help potential homebuyers to find competitive interest rates and terms. Brokers maintain contacts with different financial establishments and save customers valuable time and money. Some lenders work exclusively with brokers, and they have access to a large pool of borrowing solutions. There is a difference between financial establishments and mortgage brokers in that the later work as intermediaries between lenders and homebuyers. It is their job to determine which financial institution is the best choice based on the customer’s credit profile and loan purpose and requirements.
Is Canada in Danger of Subprime Lending?
Last year data shows that slightly over 2 percent of all mortgages in Canada are underwritten by subprime lenders, which isn’t a serious cause of concern. While the share market of unconventional lenders has increased substantially, defaults are unlikely to trigger a major financial crisis. Some experts warn that the Canadian housing market may be overvalued but there is no reason to worry about serious adverse shocks in the near future.
Conclusion
While many borrowers apply for mortgage loans with banks and credit unions, bad credit applicants are often turned down and look for alternative lenders and solutions. The good news is that there are bad credit mortgage lenders that offer fixed and variable rate solutions to clients with different credit profiles and payment histories. Subprime lenders offer loans with different repayment terms to high-risk borrowers. This is why many lenders require a substantial down payment and proof of income and regular employment. Subprime mortgages are also available to borrowers with a history of delinquencies, arrears, foreclosures, and defaults who have few other options left to finance the purchase of a home.
Seelan says
March 5, 2015 at 3:11 amHi I need mortgage .my phone416-412-3434
willie cook says
July 17, 2015 at 11:46 amlooking for mortgage of 70,000.oo
Angela says
October 15, 2015 at 1:01 amLooking for a mortgage. I have bad credit and am on Canada Pension Disability and insurance from my employer. I also am looking for as low down payment as possible. The place I am looking at they are asking 199,900. But I am sure they will take 180,000 for it. Please help. Located in nova scotia
Samantha says
October 16, 2015 at 12:40 amHi Angela,
Have you tried any of your local credit unions?
Mike davis says
October 20, 2015 at 7:32 pmI need a mortgage small down payment poor credit score full time job and 4 pensions
meg says
March 24, 2016 at 10:44 pmIs it possible to get a mortgage with a credit score of 508, household income of 50,000 a year, looking to get 140,000 we do have 14,000 down payment
Todd says
August 18, 2016 at 7:47 pmHello, I am in the same situation with a credit score of “508”. I do make approx. $80k /year. I was wondering if you had any luck getting approved for a mortgage? And what did you find out when seeking financing?
Thank you for your time.
Dee says
August 25, 2016 at 4:31 amHave you had any luck with getting a mortgage?
Woody says
March 29, 2016 at 11:06 pmI’m looking for a mortgage of 110000-150000, not so great credit but can have a down payment of at least 6-8000. Have full time employment and make 100000 a year but like I say not the best credit… Can you help please!! Paying 1200/ month rent currently and hate seeing money go out the window..
Cathy Richardson says
June 10, 2016 at 5:03 pmHi, I have found a small house, I have a mortgage broker, he got me a mortgage but now I need someone to insure it. His typical insurance companies declined the opportunity. Can anyone recommend an insurance company who will insure my (second) mortgage for me. Thank you, Cathy
Shenel says
July 28, 2016 at 1:29 pmHi my husband and I are looking to buy a house. We are first time buyers. We are looking for anything between 200,000 to 300,00 3 bedroom. My husband works for a little over 4,000 monthly and I’m a college student. We have 3 kids. My husband has been working at his current job for over 6 years however he doesn’t have good credit and my credit is fair but I don’t have a job. Coming to Canada we never knew how important having a clean credit record was however when my husband found out he made sure my credit card is paid on time and my car loan. Out household income is like 45,000 a yr. At this point begets can’t be choosers; we just want a clean safe environment for our family. Is there anyone you can refer us to for advise and do we have any luck becoming home owners?
Sharon MacDougall says
August 17, 2016 at 4:34 pmI am looking for a mortgage. I own a house now, that my son is renting. I would like to move to a house located in the area of my fiancé. I have no down payment. The house I want to purchase is, asking price 95,000 but can get for 80,000. I work full time in health care. I am widowedd for 4 years. Prior to that my credit was good. My life took a bad turn when my husband passed away and I have som issues at the credit bureau. I still need a place to live. Can you help me?
Tanya says
August 18, 2016 at 10:46 amI need to know the best route to go???
We need more space and I’m tired of renting!
We want something that will be ours! And isn’t attached to anyone else.
we can’t be a family of 5 living in a tiny 3 bedroom anymore!
Denise Richards says
August 30, 2016 at 10:50 pmHello,
I make 53,000 a year..not good credit ..no down payment ..is it even possible to get a loan for a mortgage .
Denise
Denise Richards says
August 30, 2016 at 10:52 pmYour comment is awaiting moderation.
Hello,
I make 53,000 a year..not good credit ..no down payment ..is it even possible to get a loan for a mortgage .
Denise
Mike and Karla McKenzie says
September 6, 2016 at 2:00 amHI there we are looking to buy our first home our credit is about 580 right now still trying to get it up over 620 but I’m so tired of renting and we need another bedroom for our 3 kids. Between my wife and I we make around 140,000. We have a 20,000 deposit and I’m not sure if it’s something we could do or not. Please help us.
jen says
September 19, 2016 at 3:05 pmMy score is 642, hubby has 683. both of us have what can be described as “recovering credit” as in anything hurting our credit scores are in the 5-7 year old frame and all our “new” credit is 100% positive. We want something in the 170 000 price range. first time home buyers, $5000 down payment so far. Our income is around 68 000. Ottawa area. Higher interest rates to begin with ok but requiring 15% downpayment is not.
Mae says
September 20, 2016 at 11:06 pmHi we are looking for a house that around 300 000 to 400 000 my husbnd makes 54,000 yearly without over time and I make 10,000 a yr combine with him lets say 65,000. Second time home buyer he currently at 636 credit score..we just got a car last month $300 montly payment..1 credit card but he can pay them right away..lookin for low downpayment ..
AMI says
October 17, 2016 at 3:14 pmI’m looking to buy my first home for a mortgage of 200 000 and I can have a down payment of at least 11 000. Have full time employment and make 59000 a year but like I am poor credit… Can you help please!!
Trinity says
October 29, 2016 at 6:01 pmMy husband and I are looking at a new home..we have 2 kids..we own a mobile home which we will sell. Looking for about 50,000. Our credit is battered although we did buy a brand new car and it is now fully paid off. We don’t have a down payment until we sell our home. My husband makes about 60,000 a year in our small town. Is it possible..if nothing on our credit is massive, all smaller things. We wouldn’t be moving until spring.
Larry Fitch says
November 2, 2016 at 6:37 pmLooking for a mortgage of 65000 have 5000 down with bad credit can you help ??
tahereh javadian says
December 14, 2016 at 9:41 pmwe are selling my house ,and looking for lone of 40000 $
for 2 month ,with interest of 15%
tahereh javadian says
December 14, 2016 at 9:44 pmi am selling my house ,and need 35000$
with 15% interest for 2 month
Jacqui says
February 7, 2017 at 7:03 amI have 200000 for a down payment on a 300000 house and bad credit is this possible?
Barbara Hanson says
March 28, 2017 at 9:29 pmHi. We have bad credit. Went through a proposal. Would like to get into a mobile home. Partner has fulltime employment. Would this be possible.
Ronda says
June 8, 2017 at 5:58 pmI have a credit score of 541 and a income of 56,000 for last yr will be higher this yr and looking for a mortgage of 150,000, is this possible?
Jen says
July 27, 2017 at 2:27 amHelp! I found my forever home for my hubby and I. Due to both our exes we are stuck with bad credit! The house is 105000$ and it’s a repo and been on the market for 1 year. I need help to buy this home. Between us we have 30000 a year and we have a small yard care company which is an extra bit of income coming in. I need a small no money down I can do no more than 1000 down. Please help 🙁 this home is perfect it’s all one level and Hardly needs works and close to family. Perfect for myself who has a brain injury
Mildred Hykawy says
August 22, 2017 at 7:15 pmI need money fast to pay my bills I do hope you except mobile homes .
Barry says
January 30, 2018 at 4:41 amHey Angela,
We are presently in a house that was rent to own, due to bad credit in the past. I have a credit score now around 630. We are looking move to a bank as we feel uncomfortable continuing under our present situation. The balance is 389,000 (original amount from 2 years ago)but we can put 30 percent down which we have saved privately.
Your advice is greatly appreciated.
Mildred Hykawy says
March 27, 2018 at 5:20 pmI need a loan to pay of my debts.
Kathleen says
September 25, 2018 at 7:38 pmLooking for a mortgage with bad credit rating we both work full time jobs know after college and trying to take advantage of the homeownership program where 5% down is covered as long as we find a someone mortgage. Can you recommend us to some one plse.
Thank you,
Kathleen and Jason
Bonnie Benoit says
October 29, 2018 at 3:00 amPlease I need a small mortgage for a small fixer upper we have a combined in come of 3;000 monthly income just need 30;000 we can fix up place on our own . we need asap as house won’t last bad credit .just want a home for our retirement .thank you in advance .
Ann says
March 16, 2019 at 2:11 amHi i also have bad credit but i make 110K per year . I am looking to buy small house can i get Mortgage
Please only serous lenders