What Credit Score is needed for a Mortgage in Canada?

The mortgage application process has changed a lot in Canada over the past few years. The introduction of the new mortgage rules imposed in late 2018 did nothing but complicate it further, following the inclusion of additional measures for determining who qualifies for a mortgage, and for what amount. The process of applying for a mortgage, comes with a lot of requirements; one of the most important requirements is always the credit score. Credit score is so important that an entire application may be trashed if the lender doesn’t like the figures they are seeing.

The importance of a mortgage applicant’s credit score

Other than debt, employment status, assets, and income, lenders are always interested in seeing high credit scores to qualify applicants for mortgages. In Canada, the credit score ranges between 300 and 900, but to qualify for a mortgage, most lenders will be interested in scores above 620, with the majority of lenders setting their minimum scores to 640. This means that having a score of below 620 may make it very difficult for an individual to qualify for funding.

What if your credit score is less than the minimum?

For those who need a mortgage but their credit scores are less than the minimum, all hope is not lost because there are other options they could consider. A credit score is a vital metric when dealing with traditional lending institutions such as banks. However, bad credit borrowers can always find solace in institutions such as trust companies, credit unions, and private lenders when the banks won’t accept their applications.

Through these types of other institutions, the qualifying requirements become less stringent, and the applicant can prove that they are able to meet the loan repayment terms, and have a better chance to get a mortgage, while they try to get out of debt and improve their respective credit scores.