Looking for Bad Credit Mortgage Options in Ontario?

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When you have a low credit score, qualifying for a mortgage in Canada can feel like an uphill climb. But here’s the truth: bad credit doesn’t mean you’re out of options. In Ontario, mortgage brokers can often do what traditional banks won’t—or can’t. This article will walk you through how bad credit borrowers can still access home financing, and why working with the right broker could make all the difference.

Minimum Credit Score for a Mortgage in Canada

In Canada, the credit score you need depends on the type of lender you're dealing with.

If you're applying through one of the major banks—like RBC, TD, or Scotiabank—you generally need a credit score of at least 680. These institutions are considered "A-lenders," and they cater primarily to borrowers with strong credit, steady income, and clean financial histories.

If your score falls below that threshold, you're not alone. Many Canadians fall into the non-prime or "B-lender" category, where the minimum credit score required is at least 500. These lenders are more flexible when it comes to credit, focusing on the full picture rather than a single number.

For borrowers with even lower scores or unstable income, private lenders step in. These lenders don’t have a minimum credit score requirement at all. Instead, they look at other factors like your home equity and overall risk profile.

Using a Bank vs. a Broker If You Have Bad Credit

For most Canadians, the first instinct when looking for a mortgage is to walk into their local bank branch—especially if it’s where they’ve been banking for years. There’s a sense of familiarity, trust, and convenience. But when it comes to getting approved with bad credit, that path is often a dead end.

The reality is that Canada’s big six banks (RBC, TD, BMO, Scotiabank, CIBC, and National Bank) have strict, non-negotiable lending criteria. If your credit score is below 680, or if you’ve had recent financial hiccups—like missed payments, high debt, or a consumer proposal—it’s unlikely they’ll approve you for a mortgage. Even long-time customers with stable income and assets are routinely turned away due to automated underwriting systems and rigid policies.

That’s why, whether you have great credit or a damaged credt history, exploring your full range of options with a mortgage broker just makes sense.

The best Ontario mortgage brokers have access to a wide spectrum of lending institutions, including:

Major banks and financial institutions for prime borrowers with 680+ credit scores

B-lenders (also called non-prime lenders) who work with scores as low as 500

Credit unions with more flexible, community-focused lending rules

Monoline lenders that operate only through brokers, often offering better flexibility and pricing

Private lenders who base approvals on equity and overall risk—not just credit scores

In total, there are 100+ lenders approved under the National Housing Act, and most of them are only accessible through brokers. This means that while a bank may see a rejection, a broker may see five or six viable alternatives, each with different rates, terms, and underwriting philosophies.

More importantly, brokers know how to present your file. They don’t just submit an application—they craft a case. If there’s a story behind your bad credit (medical issues, divorce, business loss), they’ll position it clearly. They’ll explain what’s been done to improve your finances, and why you’re still a good lending risk.

In short, banks offer only one “yes or no” decision. Brokers bring options, context, and strategy to the table. If you’re navigating the mortgage world with bruised credit, that difference can be the key to turning a “no” into an approval.

How Mortgage Brokers Can Help With Bad Credit

The idea of applying for a mortgage can feel discouraging when your credit score is low. You might assume that a poor credit score automatically disqualifies you—but that’s where a skilled mortgage broker can make a real difference. Their job isn’t just to find you a mortgage. It’s to navigate complexity, advocate on your behalf, and guide you toward a solution that actually fits your situation.

Unlike banks, which rely on automated decision-making and rigid rules, mortgage brokers take a holistic, human-first approach. They don’t just look at your credit score—they look at why your credit is the way it is, and what can be done about it.

Let’s say you have:

A few unpaid collections from years ago

A recent drop in your score due to high utilization

A past bankruptcy or consumer proposal that’s now discharged

Most banks would simply decline the application. But a broker will dig deeper.

Full Credit Review & Strategy

A broker will pull your full credit report and walk through it line by line. They’ll identify which items are hurting your score the most and prioritize action steps. That might mean:

Paying off debt in collections

Reducing high balances

Disputing inaccurate information

Holding off on certain inquiries

They’ll also offer clear timelines on when to take action—and when to apply—to maximize your approval odds.

Understanding and Explaining Your Story to Lenders

Bad credit doesn’t happen in a vacuum. Maybe it was job loss, illness, divorce, or a business that didn’t survive COVID. Brokers know how to tell that story to lenders. They don’t just submit numbers—they add context, which often makes the difference between a decline and an approval.

Many alternative lenders actually expect some bumps in the credit history. What they care about is: Has the issue been resolved? Has the borrower stabilized?

A broker helps shape your file to answer those questions clearly and confidently.

Matching You With the Right Lender

There are lenders in Ontario who will approve files with:

Credit scores in the low 500s

Past bankruptcies or consumer proposals

Self-employment or variable income

Limited credit history

But they all have different requirements, product structures, and tolerances for risk. Brokers know these nuances. They’ll match you with a lender that isn’t just willing to approve you—but one that can offer reasonable rates, sustainable terms, and a path forward.

Building a Long-Term Plan

A great broker doesn’t just focus on this mortgage—they help you plan for the next one. If you start with a higher-rate product from a B-lender or private lender, your broker will map out a clear transition plan:

What needs to happen for you to qualify with a better lender?

When should you refinance or renew?

How can you build or rebuild credit in the meantime?

This kind of planning is crucial if your goal is to eventually return to prime lending.

Bad Credit Mortgage Options in Ontario Canada

Most Canadians assume that if a bank says "no," that's the end of the road. But in reality, there are several alternative mortgage options available, especially if you're already a homeowner.

Refinancing a First Mortgage: If your credit is damaged but you have equity in your home, some B-lenders will still consider refinancing your first mortgage. This can be used to pay off high-interest debt or consolidate payments.

Second Mortgages: If your existing first mortgage has a good rate and you don't want to break it, a second mortgage might be a smart option. This is a loan secured against the equity in your home, placed behind your existing mortgage.

Home Equity Lines of Credit (HELOCs): B-lenders and specialized institutions offer HELOCs even to borrowers with credit challenges. These are often placed in second position and provide flexible, revolving access to funds.

Home Equity Loans: If your credit is very poor or your income is hard to verify, private lenders may offer short-term financing based on your home's equity. This is usually more expensive, but it can be a valuable bridge while you improve your financial situation.

The key here is options—and having someone who knows how to navigate them.

Interest Rates for Bad Credit Mortgages in Ontario

Bad credit usually means higher interest rates—but that doesn’t mean you should accept anything blindly. The type of mortgage product you choose, and the lender behind it, will greatly influence the rate you receive.

First Mortgages: Let’s say a borrower with good credit might get 4.5% at a major bank. A comparable B-lender might offer 5.5% to someone with fair credit and some minor issues. These rates are still reasonable and much better than what private lenders offer.

Second Mortgages & HELOCs: If you’re going this route, rates will generally start around 7.49% for HELOCs and can go higher depending on your credit profile and the lender’s risk tolerance.

Home Equity Loans: These are short-term and often interest-only loans. Rates for home equity loans from private lenders can start around 6.99% but can rise significantly if the lender sees higher risk.

It’s important to weigh the interest rate against the purpose of the loan. Are you using it to consolidate high-interest debt? Or to buy time while you rebuild credit and qualify for a better option later? A broker can help you map this out.

Getting a Mortgage from B Lenders in Canada

There isn’t a one-size-fits-all lender when it comes to bad credit mortgages in Ontario. The best option depends heavily on your goals—whether you're refinancing your first mortgage, taking out a second mortgage, or seeking a flexible HELOC. That said, a few lenders have become go-to options in the non-prime space for their flexible underwriting and specialized products.

Home Trust Company

Home Trust is one of the most recognized names in non-prime mortgage lending across Canada. They specialize in helping borrowers with less-than-perfect credit, self-employment income, or unique financial circumstances that fall outside traditional bank guidelines.

Refinancing Solutions: They offer full refinances of first mortgages for clients who may have missed payments or have credit scores in the 500s.

Standalone HELOCs: One of their standout products is a standalone HELOC in second position. This means borrowers can access home equity without having to touch their first mortgage with a bank—ideal if the first mortgage has a great rate you don’t want to lose.

Broker-Access Only: You can't walk into Home Trust to apply directly. You'll need to work through a licensed mortgage broker who understands their product lineup and can package your application properly.

Equitable Bank

Another major player in the alternative lending space, Equitable Bank (often through their “EQB Evolution Suite” for brokers), offers:

First mortgage solutions for clients with bruised credit or past consumer proposals

HELOCs bundled with a mortgage (not standalone)

Competitive pricing in the B-lending tier, often with slightly more generous guidelines than the big banks

They’re a great fit for borrowers who are starting to rebuild and want structured, longer-term solutions.

Haventree Bank

Haventree is focused on helping Canadians who are working through credit recovery. They’re especially known for:

Rehabilitation-focused lending: Their products are designed for people who've had credit issues but are making progress.

Stand-alone second mortgage: They offer "stand-alone" second mortgages for borrowers with a first mortgage from a different bank

Flexible documentation: Including support for self-employed individuals.

Equity-Based Lenders (Varied)

When traditional or B-lenders can’t help, brokers can access private lenders who make decisions based primarily on equity rather than credit. These lenders can:

Offer second mortgages, even behind large existing mortgages

Work with stated income or no income documentation

Provide quick financing for urgent needs (property tax arrears, foreclosure prevention, etc.)

Qualify for a Mortgage with Bad Credit Scores

Qualifying for a mortgage with bad credit isn’t just about getting lucky with the right lender—it’s about positioning your file strategically and cleaning up what you can, even if your credit isn’t perfect.

Here’s what lenders typically look at when assessing a bad credit application:

Equity or down payment: The more equity you have (or the higher your down payment), the more comfortable a lender will feel.

Debt servicing ratios: If you can prove that you can handle monthly payments even with existing debt, it strengthens your case.

Stability of income: Lenders will want to see that you have reliable income, even if you’re self-employed or have non-traditional sources.

Credit history context: Late payments after a divorce or medical issue? A broker can explain this to lenders and help you frame your story.

Small steps like paying off collection items, reducing credit utilization, or settling old debts can also go a long way in improving your approval chances.

Will a Co-Signer Help Me Qualify for a Mortgage?

Yes, and in some cases, it can make a huge difference.

A co-signer adds strength to your application by offering additional income and a stronger credit profile. It tells lenders, “If I can't make the payment, this person will.” Most commonly, family members—especially parents—will co-sign.

But there are a few things to consider:

The co-signer is legally responsible for your mortgage. If you miss payments, it affects their credit too.

They don’t have to live with you—a co-signer can live elsewhere.

They can be removed later, typically through refinancing once your credit improves.

A mortgage broker can help you determine whether bringing on a co-signer is the best route and what kind of product will accept this setup.

Can You Refinance Your Mortgage with Bad Credit?

Yes, you can refinance your mortgage in Ontario with bad credit—but the right approach depends on several factors, including your equity, income, and financial goals. This is exactly where a knowledgeable mortgage broker adds real value—not just by finding a lender, but by helping you structure a plan that balances cost, flexibility, and future options.

Refinancing With a Non-Prime or B-Lender

If your credit score is below 680, most traditional banks will turn you away. But non-prime lenders—commonly referred to as B-lenders—are designed for borrowers with bruised credit, non-traditional income, or recent financial recovery. Many will consider scores as low as 500, and focus more on the story behind the credit than the number itself.

These lenders also include many monoline lenders and credit unions that offer more flexible guidelines than the big six banks.

Key advantages of working with a B-lender include:

More borrowing power: B-lenders often allow your GDS/TDS limits to go up to 50%/50%, which means they allow more of your income to go toward paying for housing and total debts, compared to 39%/44% at traditional banks. This can increase your credit limits significantly.

Flexible income verification: If you're self-employed or have seasonal or variable income, B-lenders can work with alternative documentation like business bank statements or stated income programs.

Rehabilitation mindset: Many of these lenders offer short- to mid-term products that allow you to rebuild your credit before transitioning to a prime lender in a year or two.

Second Mortgage or Standalone HELOC Options

If your current first mortgage has a low rate and you're facing a large prepayment penalty to break it, refinancing may not be the smartest first move. In these cases, brokers often recommend a second mortgage or standalone HELOC instead.

These products are secured by the equity in your home but sit behind your current mortgage. They’re ideal when you:

Need to consolidate high-interest debt

Want to pay off collections or improve your credit profile

Need short-term liquidity but don’t want to disturb a favorable first mortgage

Second mortgage rates are typically higher (currently, HELOC rates start at 7.49%), but they allow you to preserve your current mortgage terms and avoid unnecessary penalties.

Strategic Guidance From a Broker

Refinancing with bad credit isn’t just about getting approved—it’s about choosing the right sequence of steps to get you the best result long term. And that’s where the strategy of a broker really shines. A broker can:

Help you use your home equity to pay off bad debt first, with the goal of improving your credit score and then refinancing your first mortgage at a better rate later.

Coordinate timing: For example, they may delay a refinance for 3–6 months while you clean up your credit and then reapply for a more favorable product.

Add a co-signer to strengthen your application. If a trusted family member has stronger credit and income, a broker can structure the deal so you qualify for a better product—even if you’re not eligible on your own today.

Build a staged plan: Whether it's starting with a private loan, moving to a B-lender, then transitioning to a bank, your broker maps the steps to get you there as efficiently as possible.

This kind of strategic thinking is why brokers are so essential for bad credit borrowers. They don’t just find you a loan—they build you a path.

Can You Get a HELOC with Bad Credit in Ontario?

Yes, you can get a Home Equity Line of Credit in Ontario even if you have bad credit—especially if you have enough equity in your home.

While major banks typically require a strong credit score (usually 680+) to qualify for a HELOC, there are non-prime lenders who offer stand-alone HELOCs that sit in second position—behind your existing mortgage. These products are designed specifically for borrowers who don’t meet traditional lending criteria.

To qualify for a HELOC with bad credit, you’ll typically need:

At least 20% equity in your home (the more, the better)

Verifiable income (this can include full-time employment, self-employment, or pension income)

A broker who knows how to structure the file properly—these aren’t standard products, so presentation matters

These second-position HELOCs offer flexible access to funds, similar to a credit card but with much lower rates, since they're secured by your property. As of now, rates typically start around 7.49%, but can vary depending on your credit profile, loan size, and location.

A mortgage broker plays a critical role here—not just in finding the right lender, but in preparing a clean, well-documented submission to get you approved.

Ontario Mortgage Broker for Bad Credit Borrowers

Refinancing or securing a mortgage with bad credit isn’t easy—but it’s far from impossible. The key lies not just in finding a lender, but in how your file is structured, presented, and guided through the process. This is where a knowledgeable mortgage broker becomes not just helpful, but essential.

Many bad credit borrowers aren’t declined because they’re financially unworthy—they’re declined because their application wasn’t positioned correctly. A strong broker understands that getting approved isn’t just about numbers; it’s about telling your financial story, identifying the right product, and strategically navigating the lending landscape.

How an Experienced Mortgage Broker Help Clients Qualify with Bad Credit

Thorough credit analysis – They look beyond your score, diving into your report to identify issues and opportunities for improvement. This may include correcting errors, addressing collections, or timing applications to coincide with score rebounds.

Lender-specific matchmaking – Brokers understand which lenders are open to your profile, whether you’re best suited for a B-lender, credit union, or private lender. They know which institutions are more forgiving of past issues and how to highlight your current stability.

Strategic planning – A good broker doesn’t just get you a loan—they build a plan. That might mean starting with a second mortgage to pay off high-interest debt, improving your credit, and then refinancing your first mortgage once you qualify for better terms.

Income structuring and document prep – For self-employed or non-traditionally employed borrowers, brokers help organize income documentation in a way that meets lender guidelines and maximizes approval chances.

Exploring all paths forward – From adding a co-signer, to leveraging home equity, to managing prepayment penalties, a broker helps you weigh every possible angle to find the most cost-effective and realistic solution.

The broker’s role is part advisor, part strategist, and part advocate. And when your credit is less than perfect, that combination can make the difference between another “no” and a well-deserved “yes.”

With the right broker by your side, bad credit doesn’t have to be a barrier—it can be a starting point toward rebuilding, refinancing, and regaining financial momentum.