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Published February 8, 2024

Best Mortgage Lenders For Bad Credit

Bad credit can prevent you from getting a mortgage at a Big Six bank, but you might still find the financing you need at one of these alternative mortgage lenders.

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A low credit score won’t automatically disqualify you from getting a mortgage, but it will make it hard to qualify at a Big Six bank or other federally-regulated financial institution.

NerdWallet evaluated 14 private and B lenders to help you find the right source for a bad credit mortgage.

LenderAvailabilityApplication ProcessMinimum Credit Score
Allowed
OSFI Regulated?
MCAN HomeNationwideMust use a
mortgage broker
<500Yes
Home TrustAll 10 provincesOnline or through a
mortgage broker
Not publicly
disclosed
Yes
First NationalNationwideMust use a
mortgage broker
<580No
Merix FinancialNationwideMust use a
mortgage broker
Not publicly
disclosed
No
Equitable BankAll 10 provincesMust use a
mortgage broker
Not publicly
disclosed
Yes
RFASelect communities
in all provinces
except Quebec
Online or through a
mortgage broker
<500Yes
CMLSOntario, B.C.,
Alberta, Manitoba,
Saskatchewan
Must use a
mortgage broker
500No
B2B BankAll 10 provincesMust use a
mortgage broker
500Yes
Community TrustAll 10 provincesMust use a
mortgage broker
500Yes
PineAll provinces
except Quebec
Online applications
only
500No
CWB Optimum
Mortgage
All provinces
except Quebec
Must use a
mortgage broker for
your first mortgage with
the bank
Not publicly
disclosed
Yes
Strive Capital
Corporation
Ontario, B.C.,
Alberta
Must use a
mortgage broker
540No
Canadian Mortgages
Inc.
All provinces except
New Brunswick and
Saskatchewan
Must use a
mortgage broker
No minimumNo
Graysbrook CapitalOntario, New Brunswick,
Nova Scotia, PEI,
Newfoundland
Must use a
mortgage broker
No minimumNo

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Guide to Canada’s best mortgage lenders for bad credit

About MCAN Home
MCAN Home mortgage features

MCAN Home is the mortgage lending arm of MCAN Financial Group, a loan company and mortgage investment corporation headquartered in Toronto. As of September 30, 2023, MCAN Home’s mortgage portfolio was valued at $3.1 billion. That’s a drop in the bucket compared to the Big Six banks, but almost 11% more than at the end of 2022, a sign of how many borrowers are gravitating to alternative lenders like MCAN. 

MCAN lends across Canada, though its primary areas of focus are major cities in Ontario and Alberta, as well as Vancouver. MCAN has an in-house team of mortgage originators and underwriters, but you’ll need to work with a mortgage broker in order to borrow from the company.

Range of products

  • Purchase mortgages for residential homes and investment properties.
  • Refinance and renewal services.
  • Discover Alternative Series and BFS Pro mortgages for borrowers with lower credit scores and, in some cases, higher debt service ratios. (Access to these products requires a down payment of 20%.

Unique offerings

  • Alternative income program: The money brought in through boarders or family members who pay rent is treated as the loan applicant’s income. 

Rates and fees

  • MCAN publishes a detailed mortgage rate table for its Discover Alternative and Precision Prime product lines.
  • Provides information around fees, loan-to-value requirements and prepayment privileges.
  • Rate information can be found under Broker Resources on the MCAN website.
About Home Trust
Home Trust mortgage features

Home Trust Company, a subsidiary of Home Capital Group Inc., has been providing a range of financial services to Canadians since 1987, including mortgages, credit cards, deposits and retail lending services. In the second quarter of 2023, Home Trust originated over $1.5 billion in mortgages.

Home Trust is headquartered in Toronto and has physical offices in Vancouver, Calgary, Montreal and Halifax. It lends in all ten provinces.

Range of products
  • Purchase mortgages for homeowners and investors.
  • Term lengths of up to five years.
Rates and fees
  • A limited number of posted mortgage rates are available on the Home Trust website.
  • To get a better sense of the actual rate you’ll be offered, you’ll need to contact a mortgage broker or fill out an online application.  
About First National
First National mortgage features

First National has been providing residential and commercial mortgages to Canadian borrowers since 1988. One of Canada’s biggest non-bank lenders, First National originated $8.3 billion in single-family mortgages and renewals in the third quarter of 2023, and had almost $142 billion in mortgages under administration as of September 30, 2023. 

First National is headquartered in Toronto, and has regional offices in Vancouver, Calgary, Montreal and Halifax. But to apply for a mortgage with First National, you’ll have to work with a mortgage broker. 

Range of products
  • Excalibur, First National’s mortgage solutions for borrowers who may not qualify for a mortgage with a Big Six bank.Five-year fixed rate mortgages.
  • Short-term mortgages.
  • Mortgages for self-employed and contract workers.
  • Mortgages for real estate investors. 
  • Mortgage transfers.
  • Home improvement loans.
  • Home warranty program.
  • Mortgage life insurance.

Unique offerings

  • Two options for buyers with non-traditional income sources: an insured product that loans up to 90% of a home’s value and a conventional mortgage that provides up to 65%.
  • Certain credit requirements mean these mortgages aren’t necessarily for borrowers with challenging credit profiles.
Rates and fees
  • A detailed list of mortgage rates on the First National website includes its fixed-rate, variable-rate, open and alternative mortgage products.
  • The rate you’re ultimately offered will depend on your unique financial situation and the negotiations between First National and your mortgage broker. 
About Merix Financial
Merix Financial mortgage features

Founded in 2005, Merix Financial manages three different mortgage brands: Merix Financial itself, Lendwise and NPX. There doesn’t seem to be much difference between Merix and Lendwise mortgage products — the two are grouped together on the Merix Financial website — but NPX is its line of alternative lending solutions , geared toward borrowers who may have trouble qualifying at a mainstream lender.   

Merix is a monoline lender, a financial institution that only deals in mortgages. The company has provided financing to more than 200,000 customers and funded more than $29 billion in mortgages. 

Merix works exclusively with mortgage brokers, so you’ll have to partner with one before approaching the company for funding. Merix can help connect you with a broker if you’re unsure how to find one. 

Range of products
  • Purchase mortgages for primary residences and investment properties.
  • Mortgage switches, transfers and bridge financing.
  • Mortgages for new arrivals to Canada and the self-employed.

Xtend and Xtend Plus, which offer amortizations of 30 and 40 years, respectively. (Mostly available in Ontario and B.C.)

Unique offerings

  • Family Plan program: Allows gifted money for their down payments
  • Flexible Down Payment program: allows home buyers to borrow money to cover their down payment and closing costs.
Rates and fees
  • Merix’s prime rate is the only interest rate the company shares publicly.
About Equitable Bank
Equitable Bank mortgage features

In addition to being one of Canada’s most well-known reverse mortgage providers, Equitable Bank also offers alternative lending solutions for eligible home buyers. Though it’s not a Big Six bank, Equitable does some serious mortgage business. In the fourth quarter of 2023, its uninsured single-family mortgage portfolio was worth $19.5 billion. 

Equitable Bank is headquartered in Toronto, with offices in British Columbia, Alberta, Halifax and Montreal. The bank offers mortgages in every province, but you’ll need to use a mortgage broker to apply for one.

Range of products
  • Fixed- and adjustable-rate mortgages for home buyers and investors. Financing for buyers with challenging credit profiles requires a 20% down payment. Equitable Bank’s mortgage offers aren’t 100% consistent from province to province. If you’re doing your own research into its products, make sure you’re getting the appropriate information for the province you intend to buy in. 

Unique offerings

  • Flexible gross and total debt service ratio guidelines for people who have experienced bankruptcy
  • 100% gifted down payments are allowed. 
  • Financing available for temporary workers. 
  • Flex valuation, a data-based tool that assesses a property’s value without the need for a home appraisal. Currently priced at $399.
Rates and fees
  • Fixed and adjustable mortgage rates for standard closed mortgages and EQB Evolution Suite products are publicly available on the Equitable Bank website.
  • Equitable Bank’s annual percentage rates, which include additional charges and fees, can be considerably higher than their posted mortgage rates. That could indicate significant origination or administration fees
  • Be sure to ask your broker to explain all the costs included in the mortgage rate you’ve been offered.  
About RFA
RFA mortgage features

Realty Financial Advisors, more commonly known as RFA, began as a real estate investment firm in 1996. Its residential lending arm, launched in 2018, includes RFA Mortgage Corporation and RFA Bank of Canada.

RFA Mortgage Corporation handles the company’s prime lending business, while RFA Bank of Canada caters to borrowers in need of an alternative or B lender. To access either, you’ll have to work with a mortgage broker. 

Range of products
  • Business-for-self mortgages.
  • New to Canada mortgages.
  • Credit Restore mortgages.
  • Rental property mortgages.

Unique offerings

  • To qualify new arrivals to Canada, RFA accepts international Equifax credit bureau reports, bank statements that confirm consistent rent payments and proof-of-payment from utility providers. 
Rates and fees
  • Interest rates for RFA’s alternative mortgage products are available on the company’s website. These are RFA’s ‘starting at’ rates, so you could wind up paying more for your mortgage.
  • Certain mortgage scenarios might also incur additional rate premiums and lender fees, such as amortizations longer than 30 years, rental property mortgages and major credit events.
About CMLS

Since launching in 1974, CMLS has grown to become one of Canada’s largest non-bank mortgage lenders. CMLS services over 10,000 customers and amassing $10 billion in assets under administration, according to a brochure on its website.

CMLS offers prime and near-prime lending products in addition to its suite of alternative mortgages for borrowers who can’t qualify for financing at a typical A lender.

Range of products
  • CMLS’s bad credit mortgages are grouped under its Aveo brand.
  • Aveo includes mortgages for principal residences and investment properties..
  • Mortgages for the self-employed.
  • Mortgages for borrowers with strong incomes but low credit scores.
  • Alternatives Solutions: similar to private mortgages, with higher rates and one-year terms.
Unique offerings
  • Simplified Rental Program: Uses a property’s rental income rather than debt service ratios to qualify borrowers for purchases or refinances. Requires a credit score of at least 620.
  • Ontario Only mortgage: Allows for 45% GDS/50% TDS for borrowers with credit scores between 500 and 600.
Rates and fees
  • Detailed rates for Aveo and Alternative Solutions mortgage are available on the CMLS website under Broker Resources. 
  • The lower your credit score, the higher the rate you’ll pay. For an Alternative Solutions loan, for example, the lowest rate is currently 8.74% if your credit score is between 600 and 650. 
  • Additional costs could include renewal fees (up to $500) or deferred payment fees ($75).
About B2B Bank
B2B Bank mortgage features

B2B Bank, a subsidiary of Laurentian Bank, provides investment, deposit and banking services in addition to running an award-winning mortgage business. B2B provides a range of mortgage products for traditional and non-traditional borrowers exclusively through mortgage brokers. 

Range of products
  • Conventional and insured mortgages for owner-occupied, rental and secondary properties.
  • Home equity line of credit and a combined purchase/HELOC product.

Unique offerings

  • Bruised Credit program: Offers financing to borrowers whose credit is suffering because of a negative credit event, such as a low credit score, bankruptcy, foreclosure or power of sale.
  • You may still be eligible for the program if you’ve experieneced more than one of these incidents, but such exceptions will be evaluated case-by-case.
Rates and fees
  • B2B’s fixed and variable mortgage rates, prime rate and HELOC interest rate are published on its website. At the time of this writing,  they were all comparable to what was on offer at Canada’s Big Six banks
  • B2B also has an “alternative rate”, which was 2.5% higher than its prime rate at the time of this writing. If you have a low credit score, the rate you’re charged is likely to be closer to B2B’s alternative rate.
  • If your gross debt service ratio exceeds 39% and your tidal debt service ratio is greater than 44%, B2B charges a 1% lender fee. Lower beacon scores can also trigger a lender fee. 
  • B2B prefers to finance the purchase of homes in desirable urban locations, and has minimum square footage requirements for houses (700 sq ft) and condos (500 sq ft). 
About Community Trust
Community Trust mortgage features

Community Trust Company, often referred to as Community Trust, has been offering a variety of financial services, including mortgages, to Canadian individuals and companies since 1975. Community Trust was acquired by Questrade Financial Group in 2019 and now operates as a Questrade subsidiary.

Like a Big Six bank, Community Trust is regulated by the Office of the Superintendent of Financial Institutions. It does, however, provide mortgages to borrowers the Big Six may not approve, hence the company motto “a flexible alternative”.

Community Trust deals exclusively with mortgage brokers. 

Range of products
  • Purchase mortgages for owner-occupied and investment properties that come in terms of one, two, three and five years.
  • Second mortgages.
  • Mortgage refinances and renewals.
  • Home equity line of credit.
Rates and fees
  • Community Trust’s posted mortgage rates are available on the company’s website. The rate you’re offered will depend on your credit score, income and the location of the property you intend to buy. 
  • At the time of this writing, Community Trust’s rates were lower than almost every posted rate available at the Big Six banks, but higher than those institutions’ discounted rates. 
  • You could incur various fees when borrowing from Community Trust, including a $500 annual maintenance fee and a renewal fee of up to $1,000. They charge $100 per loan statement, too. 
About Pine
Pine mortgage features

Launched in 2021, Pine is a new face on the Canadian mortgage scene. As a direct digital lender, Pine accepts mortgage applications online and then lets the bots take over to determine an appropriate mortgage product and interest rate.

Even though Pine is a tech-forward company, it employs mortgage advisors to help customers get the guidance they need. 

Range of products
  • Purchase mortgages.
  • Mortgage refinances and renewals. 
  • Pine’s mortgages are determined on a client-by-client basis, so the company doesn’t publish a full list of products like some of its competitors do. 

Unique offerings

  • Fully online mortgage process.
  • Quick application (10 minutes) and approval (48 hours) processes.
Rates and fees
  • Pine publishes a relatively small number of mortgage rates.
  • Pine’s mortgage advisors don’t work for  commissions, and the company says it charges no fees. 

About CWB Optimum Mortgage
CWB Optimum Mortgage features

CWB Optimum Mortgage is the residential lending arm of Canadian Western Trust Company, part of the CWB Financial Group. A full-service lender, CWB Optimum provides a range of mortgage options, including alternative solutions for borrowers in need of a customized product.

CWB Financial Group is headquartered in Edmonton, Alberta, but has developed a national presence since launching in1984.

Range of products
  • Fixed- and variable rate purchase loans for primary residences and investment properties.
  • Portable mortgages.
  • Mortgage refinances and switches.
  • Homeworks, a home equity line of credit product.
Rates and fees
  • Fixed, variable and convertible mortgage rates are available on the bank’s website. 
  • CWB’s posted rates are steep compared to some other alternative lenders, but the bank also offers significantly discounted special rates.
About Strive Capital Corporation
Strive Capital Corporation mortgage features

Strive Capital Corporation, also known simply as Strive, launched as a lender catering to borrowers with high credit scores and traditional income sources in 2020. In 2023, it began rolling out a range of alternative mortgage solutions according to a report in Canadian Mortgage Professional magazine. 

In its short time in the Canadian mortgage space, Strive has received recognition for its products, workplace environment and broker satisfaction from industry publication Canadian Mortgage Professional.

Range of products
  • Strive’s mortgages for borrowers with sub-optimal credit fall under its Aspire brand.
  • Aspire includes purchase, refinance and equity takeout options.
  • Most Aspire loans are available in terms of up to five years.
  • Aspire products available to borrowers with credit scores below 660 require down payments of up to 35%.
Unique offerings
  • Aspire 65: No minimum credit score requirement, and the applicable debt servicing ratios can rise as high as 60% GDS/70% TDS in some instances. 
Rates
  • Strive only publishes the mortgage rates for its A mortgages.
  • You’ll have to ask a mortgage broker about the rates offered on its alternative mortgages.
About Canadian Mortgages Inc.
Canadian Mortgages Inc. mortgage features

Canadian Mortgages Inc. (CMI) is an award-winning private mortgage lender. Founded as a brokerage in 2005, the company changed focus in 2008 after the Great Financial Crisis created an increased need for alternative lending solutions among Canadian homeowners. As of February 2023, CMI had a total loan volume of $1.8 billion.

In addition to being a private lender, CMI is also a mortgage investment corporation, or MIC, which provides investors direct exposure to the Canadian mortgage market.

Range of products
  • First and second mortgages worth up to 85% of a property’s value.
  • Bridge loans.
  • Equity mortgages.
  • Home renovation loans.
  • Mortgages for land purchases (additional collateral may be required).
Unique offerings
  • Bundle Mortgage: Combines a first and second mortgage on a single property. With a Bundle Mortgage, borrowers can access a loan-to-value ratio of up to 85%.
  • Fees are charged on both the first and second mortgage. Borrowers are expected to make two mortgage payments each month.
Rates and fees
  • CMI does not publish its mortgage rates. 
  • The rates charged by private lenders like CMI can be significantly higher than at other lenders.
  • CMI charges lender fees and appraisal fees, a prepayment fee worth up to three months’ interest and renewal fees that can be worth up to 2% of your outstanding mortgage balance. 
About Graysbrook Capital
Graysbrook Capital mortgage features

Graysbrook Capital is a Halifax-based private lender that has been providing equity-based mortgage solutions for over a decade. During that time, Graysbrook says it has established relationships with more than 400 mortgage brokers and grown into the largest private lender in Atlantic Canada. The company expanded its services to Ontario in 2021.

Range of products
  • Residential first and second mortgages..
  • Commercial, construction and renovation loans.
  • Bridge loans. 
  • Loans to help with credit repair and outstanding CRA debts.. 
Unique offerings
  • Blanket mortgages, which allow borrowers to cover multiple properties with a single mortgage.
Rates and fees
  • Graysbrook Capital does not publish mortgage rates on its website. The lender says it determines mortgage rates on a case-by-case basis. Finding out the rate you might qualify for will require the input of a mortgage broker that deals with Graysbrook.
  • Graysbrook’s loans are fully open and can be repaid penalty-free at any time during the loan term.
  • If you take out an interest-only loan through Graysbrook, you’ll be expected to refinance your loan or pay off the entire principal once your term comes to an end.

How bad credit mortgage lenders help home buyers

Most lenders understand that “bad credit” doesn’t necessarily mean “bad borrower.” The Big Six know this, too, but their aversion to risk means they’re exceedingly cautious about who they lend to. 

A low credit score could be the result of past spending habits, or bad financial luck that temporarily impacted your ability to keep up with your debts. Bad credit mortgage lenders take these negative events into consideration, but they also weigh things like positive trends in your credit history or your career trajectory.

Rather than focusing solely on your credit score or debt service ratios, they construct a narrative around your financial habits to determine your credit-worthiness. Just because your credit score has dipped below 650 doesn’t mean you have to abandon your dream of owning a home.

NerdWallet Mortgage Lender Reviews

Shopping for a mortgage? We’ve reviewed Big Banks, brokers, B Lenders and online-only lenders to help you finance your home purchase, refinance or renewal with confidence.

4 things to know about using a bad credit mortgage lender

While it’s possible to get a mortgage with a low credit score, working with an alternative or private lender may involve aspects that aren’t a fit for your financial situation. Keep these following points in mind when deciding whether a bad credit mortgage lender is right for you.

1. The rates could be high

Bad credit mortgage lenders assume more risk than chartered banks. To compensate for that increased risk, they may charge higher mortgage rates. Private lenders tend to charge some of the highest rates available.

To ensure you’re being offered the best possible rate, it’s important to try and improve your credit as best you can before applying for a mortgage. Reducing your credit utilization ratio or your debt service ratios can both help. 

2. You may need a substantial down payment

Another way lenders decrease risk is by requiring larger down payments. With a bad credit mortgage from a B lender, you may be required to put down a minimum of 20%.

You might be thinking, “Wait, isn’t the minimum down payment for a house in Canada only 5%?’” You’re not wrong, but minimum down payment guidelines don’t necessarily apply to borrowers with bad credit — or to lenders that aren’t federally regulated. 

With Canadian home prices as high as they are, saving a down payment can be the most difficult part of buying a home. If you want to increase your down payment savings, it might be worth investigating a First Home Savings Account or the Home Buyers’ Plan

3. The risk of losing your home could increase

Large banks often have options in place to help if making your monthly payment becomes unmanageable. B lenders, particularly private lenders, might be more willing to foreclose on your home if you fall behind on your mortgage

When a bank has a multi-billion dollar mortgage portfolio, collecting mortgage payments is a more efficient way of making money than foreclosing on homes and trying to resell them for full market value. A small, unregulated private lender, however, may view foreclosure less as a hassle and more as a windfall. 

It’s crucial that you fully understand a B lender mortgage contract before signing it. Pay particular attention to any language pertaining to the consequences of late payments.

4. You’ll be on the clock

A bad credit mortgage is generally meant to be a temporary solution, with many B lender and private mortgages lasting one to three years. This shorter time horizon means less risk for the lender, and less time for you to pay an elevated interest rate. The expectation is that you’ll improve your credit standing during your mortgage term, and renew or refinance your mortgage at a mainstream lender.

If paying down your debts and strengthening your credit score was challenging before taking on a mortgage, it’s not likely to get any easier once you buy a home, so you’ll want to devise an exit strategy (or two) before moving forward with a bad credit mortgage. You’ll likely use a mortgage broker anyway, so while they’re rate-hunting for you, ask for their input around improving your credit score and eventually qualifying with the lender of your choice.

DIVE EVEN DEEPER

Understanding B Lender Mortgages

Understanding B Lender Mortgages

If the chartered banks, or A lenders, turn you down for a mortgage, there’s an entire industry of alternative, or B, lenders you can turn to for your financing needs.

What You Need to Know Before Getting a Private Mortgage

What You Need to Know Before Getting a Private Mortgage

Private lenders have become a necessary part of Canada’s challenging real estate market. But the unique costs and conditions associated with a private mortgage must be understood before choosing one as a financing solution.

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