Most traditional mortgages need a credit score of at least 680. Don't worry - if your score is lower, you still have options.
Most Canadians save for a down payment, but almost everyone needs a mortgage to buy a home. Your credit score affects both mortgage approval and the interest rates you'll get.
Here's what you should know about credit scores when applying for a Canadian mortgage.
Aim for a 680 credit score to get a mortgage
The higher your credit score, the better your chances of getting a mortgage. A good credit score helps you:
Actually get approved
Get a better interest rate
Canadian credit scores range from 300 (poor) to 900 (excellent).
A score above 660 is considered good, showing lenders you're unlikely to miss payments.
Most lenders want to see at least 680 for a traditional mortgage. Some might go a bit lower, but higher is always better.
What affects your credit score
Payment history - Do you pay bills on time?
Credit use - Try to use less than 35% of your available credit
Credit history - Longer is better
New credit requests - Too many recent applications look risky
Types of credit - Having both credit cards and loans helps
Not sure about your score? Access a free copy of your Equifax Credit Report with KOHO to learn what makes up your credit score and what you could improve on.
How your credit score changes your mortgage
A high score tells lenders you're a safe bet. A low score makes them nervous.
Banks don't want to lend money to people who might not pay it back. If they do, they'll charge higher interest rates to cover their risk.
For you, higher rates mean bigger monthly payments and more money spent over the life of your mortgage.
What else lenders look at
Your credit score matters a lot, but lenders also consider:
Your debt ratios
How much you want to borrow
What you'll use the home for
How long you'll take to repay
Your job stability
Housing costs (taxes, utilities, condo fees)
Stress test results - Can you handle payments if rates jump?
Options with bad credit
Big banks are pretty strict about credit scores. But if yours is low, you still have options:
Try credit unions, trust companies, or private lenders
Save up for a bigger down payment
Get a joint mortgage
Find a co-signer
But honestly? Your best move might be to wait. Take some time to pay down debt and build your credit history. Then you can approach the big lenders and get much better interest rates.
What are mortgage terms?
In Canada, you can pick either a closed or open mortgage term.
With closed terms, you'll pay penalties if you pay off your mortgage early. With open terms, you can pay it all off anytime with no extra charges.
After deciding between open or closed, you need to pick how long your term will be. Terms can be two years, three years, five years or more, depending on your lender. Most Canadians go with five-year fixed rate mortgages.
When your term ends, you can either negotiate a new rate with your bank or switch to another lender.
Amortization period
Your amortization period is different from your term. It's how long it'll take to pay off your entire mortgage debt with regular payments.
Common amortization periods in Canada are 10, 20 and 25 years, but can now go up to 30 years. Recently, the government made 30-year mortgages available to first-time buyers and those buying new builds, which can lower your monthly payments.
Here's the trade-off: longer amortization means lower monthly payments but more interest paid over time. Shorter amortization means higher monthly payments but less interest overall.
What you need to apply for a mortgage
To apply, you'll need:
ID
Proof of employment
Recent tax returns
Info about your existing debts
A list of your assets
A home financing advisor can help you compare different mortgages, rates, and payment options.
It's smart to get pre-approved before house hunting so you know what you can afford.
Optional mortgage insurance
Many lenders offer optional creditor insurance that can help with mortgage payments or pay off your loan if you become disabled or critically ill.
Other costs to budget for
Besides your down payment, budget for:
GST or HST on new homes
Land transfer taxes
Property taxes
If you're not a permanent resident or provincial nominee, you might also pay a foreign buyer tax.
Other costs include closing fees for legal work, inspections, and more. And don't forget - condos often come with monthly maintenance fees.
Getting mortgage-ready
Getting a mortgage isn't just about finding the right house - it's about getting your finances in order first. Your credit score is a big part of that puzzle.
If your score isn't quite at 680 yet, don't stress. Start improving it now by paying bills on time and keeping credit card balances low. Even small improvements can help you get better rates.
Remember that mortgage shopping is about more than just the interest rate. Think about what term works for you, how long you want to be making payments, and all those extra costs that come with buying a house.
The best approach? Start preparing early. Check your credit score, save aggressively for a down payment, and get your paperwork sorted before you talk to lenders.
And don't rush it. Sometimes waiting a few months to boost your credit score can save you thousands of dollars over the life of your mortgage.
About the author
Sam Boyer spends, invests, budgets, and writes. He enjoys writing about things he wishes he’d learned earlier — like spending, investing, and budgeting. A journalist originally from New Zealand, Sam has written extensively about consumer affairs, insurance, travel, health, and crime.
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