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Welcome to the guide on ‘Best Bad Credit Mortgages in Ontario.’
If you’re worried about getting a mortgage because your credit isn’t great, don’t worry.
This guide is here to help you understand how you can still own a home, even if traditional banks might hesitate to lend to you.
In this first part, we’re setting up the basics for how you can work towards owning a home, even with a less-than-perfect credit score.
Best bad credit mortgages from top alternative lenders offering mortgages in Ontario. Rates are updated daily. Select a mortgage to view more details.
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Ontario, hosting 38% of Canada’s population, contributes nearly half of the country’s GDP, supported by various incentive programs for homeownership.
This east-central Canadian province boasts the nation’s capital, Ottawa, and its largest city, Toronto, alongside other key cities like Mississauga and Hamilton. Its diverse population, bolstered by welcoming immigration and housing policies, places the Greater Toronto Area (GTA) as a top global destination for immigrants, trailing only London and New York.
Ontario houses giants like IBM and Google, a hub for manufacturing and technology, and top-tier universities such as the University of Toronto, fueling a vibrant startup scene and job creation.
'A Place To Grow'
$835,000
$486,206
15,007,816
$80,322
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In Ontario, as in the rest of Canada, credit scores range from 300 to 900.
A credit score is considered “bad” or poor if it falls below 600.
Here’s a general breakdown of credit score ranges and their typical classifications in the context of obtaining a mortgage:
Individuals with scores below 600 may find it challenging to secure mortgage financing from traditional banks and lenders.
These individuals are generally considered high-risk borrowers.
Such borrowers might have to explore alternative lending options, including bad credit mortgages offered by private lenders or trust companies.
These options usually have higher interest rates and may require a larger down payment to offset the perceived risk.
It’s also important to note that credit score is crucial in mortgage approval decisions.
However, lenders also consider other aspects of your financial situation, such as your income, employment stability, debt-to-income ratio, and the down payment you can afford. Improving any of these factors can help offset the impact of a lower credit score.
If you’re dealing with bad credit, understanding what affects your credit score and how to improve it is crucial.
Let’s dive into the main factors that influence your credit and outline steps you can take to restore it.
If you’re in Ontario and think your bad credit might stop you from getting a mortgage, there’s still hope.
Here’s a straightforward guide on securing a mortgage even with less-than-ideal credit.
First, check your credit score to get a clear picture of your situation.
In Canada, you can obtain a free credit report from credit bureaus like Equifax or TransUnion once a year.
This step is crucial because it helps you understand the challenges you might face and areas you can improve.
Lenders see a larger down payment as a sign of commitment.
If you can save more than the minimum required down payment, you’ll reduce the amount you need to borrow and show lenders you’re serious.
This can sometimes offset the negative impact of a low credit score.
Make sure to expand yourself beyond traditional banks. Ontario is home to a variety of lenders, including credit unions, mortgage brokers, and private lenders, who may have more flexible lending criteria for those with bad credit.
Each has its benefits, so research and consider all possible options.
Find a reliable co-signer with a strong credit history.
A co-signer agrees to repay the loan if you can’t, significantly reducing the risk for lenders and improving your chances of approval.
Understand that bad credit usually means higher interest rates.
Lenders charge more to offset the increased risk they’re taking on.
While not ideal, don’t let this discourage you.
The goal is to get into the housing market and start building equity.
A mortgage broker can be invaluable when you have bad credit.
They have access to many lenders and can find the best fit for your situation.
They’ll also offer advice on how to improve your application and secure better terms.
Even as you secure a mortgage, start taking steps to improve your credit for the future.
This could mean paying down existing debt, making all future payments on time, and avoiding new credit inquiries.
If you have bad credit and want a mortgage, the minimum down payment required is typically at least 20% of the property’s value.
This requirement is higher than for those with good credit, reflecting the increased risk that lenders perceive when loaning money to individuals with poor credit histories.
To secure a mortgage under these conditions, borrowers often need to turn to alternative lenders, also known as B-lenders or bad credit lenders.
These lenders specialize in working with individuals who do not meet the stricter lending criteria of traditional banks and credit unions.
Accessing the mortgage products these alternative lenders offer is usually done through the mortgage brokerage channel.
Platforms like approvU provide a convenient way to shop for and compare bad credit mortgages in Ontario across multiple lenders.
Using such a platform, you can find the most suitable mortgage options tailored to your financial situation, even with a bad credit score.
This approach allows you to explore various mortgage offers.
It ensures you can make an informed decision based on interest rates, terms, and other critical factors relevant to your needs and circumstances.
Now that you understand more about managing bad credit, improving your credit score, and the details of bad credit mortgages, you’re ready to move forward.
You’ve learned how to find lenders who can help, understand mortgage details, and move towards buying a home even with credit challenges.
This information lets you make intelligent decisions and confidently approach the mortgage application.
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