Introduction
If you’ve entered into a consumer proposal in Canada, you’re not alone. Thousands of Canadians use this government-regulated debt settlement process each year as a way to avoid bankruptcy and get their finances back on track. But if you’re currently in a consumer proposal, you might be asking yourself: “Can I get a mortgage while in a consumer proposal?”
The short answer is yes, it’s possible, but it requires strategy, planning, and often the guidance of a mortgage professional. In this guide, we’ll break down how consumer proposals affect mortgage approval, what lenders look for, and seven powerful ways to improve your chances of getting approved.
What Is a Consumer Proposal?
A consumer proposal is a legally binding agreement set up between you and your creditors. It allows you to pay back a portion of your debt (often at a reduced amount) over a period of up to five years. It’s administered by a Licensed Insolvency Trustee (LIT) and is considered a less drastic option compared to bankruptcy.
While a consumer proposal can reduce financial stress, it also impacts your credit rating. Your credit report will show an R7 rating, which signals to lenders that you’ve settled debts through a proposal rather than full repayment.
Can You Get a Mortgage While in a Consumer Proposal?
Yes but with conditions. Mainstream “A lenders” like big banks will almost always decline mortgage applications while you’re in a consumer proposal or until it has been discharged for at least two years. However, there are still options:
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Alternative (B) lenders may consider your application if you can show stable income and at least 20–25% down payment.
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Private lenders can sometimes provide short-term financing while you rebuild your credit.
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After successfully completing your proposal, your options open up considerably.
7 Powerful Ways to Improve Your Chances of Approval
1. Work With a Mortgage Broker Experienced in Proposals
Not all mortgage brokers understand the nuances of consumer proposals. A skilled broker will know which lenders are willing to work with you, how to structure your application, and how to present your case to maximize approval odds.
2. Save for a Larger Down Payment
Lenders see bigger down payments as lower risk. While traditional lenders often want 5–10%, those in consumer proposals may need 20–30% down. This demonstrates commitment and reduces the lender’s exposure.
3. Rebuild Your Credit Score During the Proposal
Even while making proposal payments, you can take steps to rebuild your credit:
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Obtain a secured credit card.
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Keep balances low and pay in full each month.
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Avoid late payments at all costs.
Consistency is key lenders want to see that you’ve learned to manage credit responsibly.
4. Show Stable Income and Employment
Your income stability matters just as much as your credit score. If you’ve been with the same employer for 2+ years, it reassures lenders. If you’re self-employed, keeping detailed tax records and showing steady revenue will be essential.
5. Consider Private Lending as a Stepping Stone
Private lenders often charge higher rates, but they can provide bridge financing until you complete your proposal and rebuild your credit. Once you qualify for better terms, you can refinance into an A or B lender.
6. Get a Strong Co-Signer or Guarantor
Having a trusted family member or partner with good credit to co-sign your mortgage can open doors. This lowers lender risk and increases your chances of approval—even while in a consumer proposal.
7. Plan to Refinance After the Proposal
Think long-term. Even if you get a mortgage at a higher rate today, you can refinance into a more competitive product once your consumer proposal is discharged and your credit improves. A strategy of 6-18 months post-proposal refinancing is realistic for many homeowners.
Alternatives If You’re Not Ready Yet
If getting a mortgage during your consumer proposal isn’t feasible, consider these alternatives:
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Rent-to-own programs allow you to secure a property while rebuilding credit.
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Waiting until your proposal is discharged—often only 12–24 months more.
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Focusing on credit repair and savings, then re-applying when your financial position is stronger.
FAQ
Q: Can I get a mortgage during a consumer proposal in Canada?
Yes, but usually not through major banks. You may need to work with B lenders or private lenders.
Q: How long after a consumer proposal can I apply for a mortgage with a bank?
Most A lenders want to see at least two years passed after discharge with re-established credit.
Q: What credit score do I need after a consumer proposal to qualify for a mortgage?
Ideally, 600+, but many alternative lenders will work with scores in the 500s if you have strong income and a larger down payment.
Q: Is private lending a safe option?
Private lending can be expensive, but it is often used as a short-term solution until you qualify for a traditional mortgage.
Q: Will a mortgage broker help me more than a bank?
Absolutely. Mortgage brokers have access to a wide range of lenders—including those who understand consumer proposals.
Key Takeaways
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Yes, you can get a mortgage while in a consumer proposal—but not with all lenders.
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Alternative lenders and private financing are your most likely options until your proposal is discharged.
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Building savings, repairing credit, and working with the right mortgage broker will dramatically improve your chances.
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Think of this as a step-by-step process: secure financing today, then refinance later when your credit and options improve.
Final Thoughts
A consumer proposal doesn’t have to end your dream of homeownership. With the right strategy, patience, and professional guidance, many Canadians secure mortgages even while in a proposal. Your journey may take extra effort, but each payment, each saved dollar, and each responsible credit decision brings you closer to approval.
If you’re ready to explore your options, connect with a licensed mortgage broker who specializes in helping clients during or after consumer proposals. The right advice today can save you thousands tomorrow.
- In a Consumer Proposal? 7 Powerful Ways to Get Approved for a Mortgage (Despite the Challenges) - October 3, 2025
- 9 Important Steps If You Can’t Pay Your Mortgage in Canada (Educational Guide) - October 1, 2025
- Second Mortgage Exit Strategy (Durham Region): Get Back to an A-Lender in 6–18 Months - September 29, 2025
