Bad Credit Mortgage Solutions for Canadian Homeowners
A bad credit mortgage is not a single product. It is a category of equity-based and alternative-lender solutions for Canadians the big banks have turned down. If your bank said no because of your credit score, you may still have real options.
At LendToday, we help homeowners get approved based on the equity in their home, not just a perfect credit score. Whether you want to consolidate debt, refinance, or buy a home, we work to find a solution that actually fits your situation.
What Is a Bad Credit Mortgage?
A bad credit mortgage is a mortgage arranged through an alternative or private lender for borrowers who do not meet the strict credit requirements of a traditional bank. Instead of focusing almost entirely on your credit score, these lenders look at the bigger picture, especially the equity you have built in your home.
Home equity is the difference between what your property is worth and what you still owe on it. When you have meaningful equity, a lender has security, which means your credit score becomes far less of a roadblock. That is the core idea behind a bad credit mortgage: approval based on what your property is worth, not just a number on a credit report.
If your bank has recently declined you, you are not alone, and it does not mean you are out of options. A mortgage broker knows which lenders and products fit borrowers with bruised credit, and can match you to the right one.
What Counts as Bad Credit in Canada?
Credit scores in Canada generally range from 300 to 900. Most lenders group them into broad bands. Where you fall affects which lenders will consider you, but even a low score does not close the door when you have home equity to work with.
| Credit band | What it generally means for your mortgage options |
|---|---|
| Excellent | You will likely qualify with traditional banks and A lenders at their most competitive terms. |
| Good | Most banks and A lenders will still consider you, though some conditions may apply. |
| Fair | Banks may hesitate or decline. B lenders and alternative lenders are often a strong fit here. |
| Poor | Traditional banks usually say no. Equity-based and private lending solutions are typically the path forward. |
General guidance only. Each lender sets its own criteria, and your overall situation, including equity, income, and the property itself, all factor into a decision.
The key takeaway: a low score narrows your options at the bank, but it does not have to end your search. To better understand where you stand, see our guide to your credit score in Canada.
Why Banks Decline Borrowers with Bad Credit
Traditional banks follow rigid lending rules. Their approval process leans heavily on your credit score, your provable income, and a federal mortgage stress test that requires you to qualify at a higher rate than the one you would actually pay. A single missed payment history, a past bankruptcy, or income that is hard to document can be enough for an automatic decline.
The problem is that these rules do not account for real life. Job loss, illness, divorce, or a stretch of self-employment can damage a credit score without changing the fact that you are a responsible homeowner with valuable equity.
That gap is exactly why alternative and private lenders exist. They are willing to look past a low credit score and assess the strength of your application as a whole, with your home equity at the centre of the decision.
Types of Bad Credit Mortgage Solutions
There is no single bad credit mortgage. The right solution depends on your goals, your equity, and your situation. These are the options we most often help homeowners with:
B Lenders & Sub-Prime Lenders
B lenders and sub-prime B lenders offer mortgages with more flexible credit and income requirements than the big banks, making them a common first step for borrowers with fair or bruised credit.
Private Mortgages
A private mortgage is funded by a private lender who bases the decision primarily on your home equity. This is often the path forward when credit or income challenges rule out other lenders.
Home Equity Loan
A home equity loan lets you borrow a lump sum against the equity in your home, with approval driven by that equity rather than your credit score alone.
Home Equity Line of Credit
A HELOC gives you revolving access to your equity, so you draw funds as needed and pay interest only on what you use.
Refinance to Consolidate Debt
Refinancing can roll high-interest debts into one lower-cost payment. Learn more about refinancing to consolidate debt and free up monthly cash flow.
Second Mortgage
A second mortgage sits behind your existing first mortgage, letting you tap equity without disturbing your current rate, even with bad credit.
Bank vs. B Lender vs. Private Lender
When credit is a challenge, it helps to understand how the three main types of lenders differ. Here is a general comparison.
| Factor | Traditional Bank (A Lender) | B Lender | Private Lender |
|---|---|---|---|
| Credit flexibility | Low. Strong credit required. | Moderate. Fair credit often accepted. | High. Credit is a minor factor. |
| Main basis for approval | Credit score and provable income | Credit, income, and equity | Home equity |
| Income documentation | Strict | More flexible | Most flexible |
| Typical approval speed | Slower | Moderate | Often fast |
| Best fit for | Borrowers with strong credit and steady income | Fair credit or self-employed borrowers | Significant credit or income challenges with equity |
General comparison for illustration only. Criteria, terms, and approvals vary by lender and individual situation.
Common Situations We Help Solve
Bad credit rarely happens in isolation. It usually shows up alongside another financial challenge. These are some of the situations we help homeowners work through:
Buying a Home with Bad Credit
Buying a home should be an exciting milestone, but it can feel stressful when your credit is not where you want it to be. The honest truth is that buying with bad credit usually requires a larger down payment, often 20% or more, because alternative lenders offset credit risk with a bigger equity stake in the property.
Many financial institutions fail to see the potential in helping you settle into a new home. Our team looks at the bigger picture and helps you find financing options that work for your circumstances. The path to home ownership may come with a few bumps, but with the right lender and a realistic plan, it is achievable.
Refinancing Your Mortgage with Bad Credit
If it is time to refinance but your credit score has become a problem for your bank or credit union, it is time for a plan B. Refinancing your mortgage can be a smart financial move even when your credit is not great, because the equity in your home does much of the work.
By refinancing, many homeowners are able to consolidate high-interest debts into one lower payment, catch up on past-due bills, and pay off obligations from a consumer proposal or bankruptcy. Where it makes sense and saves money, you can also combine a first and second mortgage into one to reduce the interest you pay. A new mortgage can have a real impact on your overall financial picture.
A practical first step. Use our Home Equity Calculator to estimate how much you may be able to access, then talk to a specialist for a precise figure.
Do You Qualify for a Bad Credit Mortgage?
There is no perfect-credit requirement here. If most of the following describe you, it is worth applying:
- You own a home in Canada and have built up some equity in it
- Your bank or credit union has declined you because of your credit
- You want to consolidate debt, catch up on bills, refinance, or buy
- You have a past bankruptcy, consumer proposal, or self-employed income
- You are ready to use your home equity to move forward
How It Works
Getting started is simple, and there is no obligation. Timelines vary by situation, but the path usually looks like this:
Complete our short, secure application. It only takes a few minutes and does not affect your decision to move forward.
A specialist looks at your home equity, your goals, and the full picture, not just your credit score.
Drawing on our network of B lenders, private lenders, and alternative lenders, we find the option that fits.
Apply today and we will typically get back to you within 24 hours with a clear picture of what is possible.
Why Homeowners Choose LendToday
Experience that works for you. Our team brings more than 30 years of combined experience helping Canadians qualify for financing when the bank has said no.
We work where banks won't. We base our decisions on your equity, so a bruised credit history, a past bankruptcy or consumer proposal, a job loss, or maxed-out credit does not automatically rule you out.
In-house credit guidance. Beyond arranging financing, we can offer guidance to help you understand and rebuild your credit over time, so today's solution becomes part of a stronger financial future.
Access to private and alternative lenders. Through our network, we connect you with lenders who base their decision on your equity, not just a credit score or debt-to-income ratio.
An honest answer, fast. Apply online today and we will typically get back to you within 24 hours with a clear, no-obligation picture of your options.
Turned Down by Your Bank? Let's Find a Path Forward.
A low credit score is not the end of the road. At LendToday, we help homeowners get approved based on their equity, lay out the options clearly, and there is no obligation to proceed.
Apply online today and we will typically get back to you within 24 hours.
Bad Credit Mortgage FAQs
Can I get a mortgage with bad credit in Canada?
Yes. While traditional banks may decline you, alternative and private lenders can approve a mortgage based primarily on your home equity rather than your credit score. If you own a home with equity in it, bad credit does not automatically disqualify you.
What credit score do I need to get a mortgage?
There is no single answer. Traditional banks generally look for strong credit, while B lenders and private lenders are far more flexible and may have no strict minimum, because they weigh your equity and overall situation. A lower score may affect your rate, but it does not have to stop you from being approved.
What is considered a bad credit score in Canada?
Credit scores in Canada range from roughly 300 to 900. Lower scores are generally viewed as higher risk by traditional lenders. The exact cutoffs vary by lender, which is why a score that gets declined at a bank can still be workable through an alternative or equity-based solution.
Can I buy a house with bad credit?
Yes, though it usually requires a larger down payment, often 20% or more, because alternative lenders offset credit risk with a bigger equity stake. With a realistic plan and the right lender, home ownership is achievable even with a low credit score.
How much down payment do I need with bad credit?
It depends on the lender and your situation, but a down payment of 20% or more is commonly required when credit is a challenge. The larger your down payment, the more security the lender has, which can improve your chances of approval.
Can I refinance my mortgage with bad credit?
Yes. Refinancing with bad credit is often possible because the decision leans on your home equity. Many homeowners refinance to consolidate high-interest debt, catch up on bills, or free up monthly cash flow, even when their credit score is low.
Can I get a mortgage after a bankruptcy or consumer proposal?
Often, yes. A past or current bankruptcy or consumer proposal does not automatically disqualify you, because approval is based mainly on your equity. For many homeowners, an equity-based mortgage is part of rebuilding their financial footing.
Can I get a bad credit mortgage if I'm self-employed?
Yes. Self-employed homeowners are one of the most common groups we help. Because approval is driven by your home equity rather than strict income verification, hard-to-document or irregular income is far less of a barrier than it would be at a bank. Learn more about our self-employed mortgage options.
Will a bad credit mortgage help me rebuild my credit?
It can. Making consistent, on-time payments on a mortgage demonstrates responsible credit behaviour over time, which can help improve your credit score. Many homeowners use an equity-based solution as a stepping stone back toward traditional financing.
Are interest rates higher on a bad credit mortgage?
Generally, yes. Alternative and private lenders take on more risk, so their rates are typically higher than a traditional bank's. The trade-off is access to financing you might not otherwise qualify for, often as a temporary bridge while you rebuild and work toward better terms.
Can I get a home equity loan with bad credit?
Yes. A home equity loan is approved primarily on the equity in your home, not your credit score, which makes it a common solution for homeowners with bruised credit who need a lump sum.
How fast can I get approved?
It varies by situation, but we typically respond within 24 hours of your application with a clear picture of your options. Equity-based solutions can often move quickly once your equity is confirmed and your documents are in order.
Do you only help homeowners in Ontario?
LendToday is a licensed Ontario mortgage brokerage, and through our lending partners we help homeowners access bad credit mortgage solutions across Canada. Contact us to find out what is available in your area.