Getting a Home Loan with Bad Credit

Posted on 2nd November 2015

Canadians can get into trouble with debt, which can lead to bad credit. This can make it difficult to get a home loan. At, we understand that life is full of difficulties and challenges, and that a bad credit history shouldn’t prevent you from accessing a home loan to meet your financial obligations.

Canadian Household Debt Rises to Record Levels

Canadian household debt levels are rising at their fastest pace in nearly three years. Canadian household credit has risen at an annualized rate of 5.9% to $1.869 trillion. Last year, household debts were up 5%.1

Today, roughly 80% of Canadians are in debt. In fact, Canadians now spend an average of 14% of after-tax income on their debts. That’s up from 11% in 1990; even though interest rates have fallen from 14% then to 0.05% today. Not all of that debt comes from mortgages. Credit card balances held by chartered banks are up approximately 6% over the last two years.2

Debt, in and of itself, is not a bad thing. The low interest rate environment has helped fuel the housing market and the Canadian economy. But if you can’t keep up with your debt payments, for whatever reason, that’s when it can become a very big problem.

How Bad Credit Affects Getting a Home Loan

In a typical year, between 120,000 and 150,000 Canadians file a consumer proposal or declare bankruptcy. Even being late on a few bills can negatively impact your credit score.

In Canada, the biggest credit companies use a sliding scale from 300 to 900. The higher your credit score, the less of a risk you are for lenders to default. The minimum credit score you need to get the best rates is 680. It also helps if you have a two-year track record of managing your debt without any serious delinquencies.

Factors that can negatively impact your credit score include late or skipped bill payments, high credit balances, loan balances, even having too much available credit. If you have a credit score or 650 or below, it can be difficult to get a home loan.

But it’s not impossible. If you have bad credit, it can take some time to prove to the credit bureau that your spending habits have changed. Unfortunately, if you need to get a home loan while you’re trying to improve your credit status, it can be difficult to get approved.

That’s because Canada’s big banks might see those with poor credit as being a risk. But there is more to Canada’s lending landscape than big banks. There are a large number of financial institutions and private lenders that specifically offer home loans to those with bad credit. While the interest rates will most likely be higher, you will at least be able to access the funds you need. And paying back the home loan will help improve your credit score. Helping Those with Bad Credit Get Home Loans

It can be difficult and stressful to get a home loan when you have bad credit. That’s why it’s important to contact the licensed, independent agents at We have access to hundreds of different lenders, many of whom provide loans specifically to those with bad credit. They have also helped thousands of Canadians achieve their financial goals.

To find out how you can rebuild your credit score and meet your financial obligations, contact today . Or apply online and a lending specialist will help you set up an appointment for a free personal consultation at your earliest convenience.


1. “Canadian household debt hits record high as consumer spending rises,” The Globe and Mail website;

2. “Why 1 in 6 Canadians Will Go Bankrupt,” Bankruptcy Canada website;

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