Can You Get a Mortgage with a Low Credit Score? What You Need to Know in 2025

Getting approved for a mortgage in today’s market isn’t as straightforward as it used to be. With changing mortgage rates, stricter lending rules, and economic uncertainty, many people are asking the same question: Can I still qualify for a mortgage if I have a low credit score?

In my recent conversation with mortgage broker Dion Beg, we unpacked this very question. We covered everything from how lenders are reacting to the current market to what your options are if your credit isn’t where it needs to be. If you’re navigating the home buying process, especially with credit concerns, this post is for you.

Mortgage Market Update: What’s Happening in 2025?

The mortgage world is shifting. We are seeing fewer transactions than we’ve had in the past two decades, and major lenders are reacting accordingly. Just this month, Equitable Bank, one of the largest alternative lenders in Canada, announced an 8 percent reduction in its workforce.

This slowdown is forcing banks and B lenders to tighten their guidelines. If you’re applying for a mortgage right now, especially with a lower credit score or non-traditional income, the lending environment may feel more restrictive than in previous years.

Can You Still Get a Mortgage with Bad Credit?

The short answer is yes, but it depends on your situation.

Lenders in Canada typically fall into three categories:

• A lenders (major banks)

• B lenders (alternative or non-prime lenders)

• Private lenders (including MICs or Mortgage Investment Corporations)

If your credit score is below 680, you might not qualify with a major bank. Once you dip below 650, the options with A lenders begin to disappear. However, B lenders and private lenders may still offer financing if you meet other conditions.

When Do B Lenders and Private Lenders Make Sense?

B lenders and private lenders are ideal for borrowers who are strong in some areas but weak in others. For example:

• You’re self-employed with strong cash flow but limited verifiable income

• You have a lower credit score but a strong down payment

• You’re consolidating debt or recovering from financial challenges

Dion explained that while B lenders used to be a solid fallback option, new regulations have made them more selective. In many cases now, borrowers may need to look directly at private lenders, especially if both income and credit are weak.

What Is Private Lending and How Does It Work?

Private lending is often misunderstood. Many people think of it as risky or informal, but the reality is quite different.

Dion works regularly with Mortgage Investment Corporations (MICs), which are fully regulated investment funds that lend to borrowers based on the equity in their property, not just their credit score or income.

Private lenders focus mainly on the asset and how quickly they could recover their investment if something goes wrong. This makes it easier for certain borrowers to qualify, but it also means the terms may be stricter and the lender may act quickly in the case of missed payments.

Credit Score Basics: What You Need to Know

Most Canadians don’t realize that a credit score of 680 or higher opens the door to better mortgage options. Here’s a general breakdown:

• 680 and up: You’re in great shape with most lenders

• 650–679: Still workable, especially with B lenders

• Below 650: A lenders are mostly off the table

• Below 600: You’ll need to look at private lending

Your credit score is calculated by agencies like Equifax and TransUnion, and it depends on several factors, including:

• Number of credit facilities

• Utilization rate (how much of your credit you use)

• Length of credit history

• Payment history

How to Improve Your Credit Score

Improving your credit score takes time and a smart strategy. Here are some of the key takeaways Dion shared:

1. Get multiple credit facilities

   Two or three credit cards or lines of credit help build your credit profile.

2. Increase your credit limits

   Higher limits reduce your utilization rate. Using $500 on a $5,000 limit looks better than maxing out a $500 card.

3. Never miss payments

   Even a single missed payment can damage your score.

4. Do not close old accounts

   Keeping long-standing credit accounts open helps improve your history.

5. Avoid applying for too much credit all at once

   If you’re planning to buy a home soon, applying for multiple new credit cards may negatively affect your score in the short term.

Wrap Up

There are still many options available for buyers with less-than-perfect credit. Whether you’re self-employed, rebuilding credit, or just looking for alternative lending options, it all starts with understanding where you stand and working with the right professionals.

If you need help navigating the mortgage process, reach out to a mortgage broker like Dion Beg who can guide you through A, B, and private lending options based on your unique profile.