Under 600 Credit Score?
Your Equity is the Ultimate “Reset” Button.
Walking into a traditional bank with a credit score under 600 often feels like hitting a brick wall. However, securing a bad credit mortgage in Canada is more doable than most homeowners realize—provided you have the right amount of skin in the game. Specifically, with 20% equity in a refinance or a 20% down payment on a purchase, your credit score becomes a secondary detail.
The Truth About Bad Credit Mortgage Canada
“I need a 680 score to even apply for a mortgage in Canada.”
“Lenders care about Risk. If you have 20% equity, the property acts as the security, allowing for much more flexible credit approvals.”
How a Bad Credit Mortgage Canada Works with 20% Equity
When your credit is bruised, alternative lenders shift their focus from your FICO score to the security of the asset. By having 20% equity or a 20% down payment, you are effectively providing a safety cushion that allows for common-sense underwriting.
Purchasing a Home
A 20% down payment moves you into the alternative lending space where your 500-600 credit score won’t trigger an automatic rejection.
Refinancing for Debt
We use your home’s equity to wipe out collections and high-interest debt, hitting the reset button on your entire financial profile.
The 3 Pillars of Your Credit Comeback
We don’t just submit an application; we build a narrative. Securing a bad credit mortgage Canada requires showing the lender that your past struggles are behind you.
1. The “Story” Behind the Score
Lenders are humans. Whether it was a divorce, medical leave, or a business setback, we write a formal letter of explanation to provide context for your credit history.
2. Proof of Current Stability
A subpar score doesn’t mean you can’t afford a home. We highlight your current income stability to prove you have the capacity to manage the mortgage today.
3. The Exit Strategy
Alternative mortgages are a bridge. We show the lender a 1-2 year plan to rebuild your score so you can eventually return to a prime bank rate.