What Credit Score Do You Need to Buy a House in Canada?

You generally need a credit score of at least 600 to qualify for an insured mortgage in Canada, although many traditional lenders prefer a score of 680 or higher.

A higher score can improve your chances of approval and help you access more competitive mortgage rates.

However, your income, debt and down payment also play important roles.

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KOHO Credit Builder helps Canadians establish or improve their credit history through consistent monthly payments, without relying on a traditional credit card.

With KOHO Credit Builder, you can:

• See an average credit score increase of 74 points*

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*Based on users with a starting credit score of 450 or lower who used all credit-building tools for at least 12 months and made on-time payments. Individual results vary.

What Is the Minimum Credit Score for a Mortgage in Canada?

The minimum depends on the lender and mortgage type.

Here is a general breakdown:

• 680 or higher: Many traditional banks prefer this range.

• 600 to 679: You may qualify for an insured mortgage, depending on the lender and your financial situation.

• Below 600: Approval may be possible through alternative lenders, but options are more limited and borrowing costs may be higher.

The Canada Mortgage and Housing Corporation (CMHC) generally requires at least one borrower or guarantor to have a credit score of 600 or higher for its mortgage loan insurance programs.

Meeting that requirement does not guarantee mortgage approval. Your lender may have stricter standards.

Can You Buy a House With Bad Credit?

Yes, but you may have fewer financing options.

Some alternative lenders work with borrowers who have lower credit scores or a history of financial difficulties.

However, these mortgages may come with:

• Higher interest rates

• Additional lender fees

• Larger down payment requirements

• Shorter mortgage terms

Compare the total borrowing cost carefully. A higher interest rate can make homeownership significantly more expensive over time.

Does a Larger Down Payment Help if You Have Bad Credit?

It can.

A larger down payment reduces the amount you need to borrow, which may make your mortgage application more attractive to certain lenders.

If you put down at least 20%, you generally do not need mortgage default insurance.

However, a larger down payment does not automatically compensate for poor credit. Lenders still assess whether you can afford the mortgage.

What Else Do Mortgage Lenders Look At?

Your credit score is only one part of the application.

Lenders also consider:

• Income and employment stability

• Existing debt

• Down payment

• Payment history

• Housing expenses

• The property's value

You must also meet applicable mortgage qualification requirements, including the mortgage stress test when required.

This means you could have an excellent credit score and still be declined if your income cannot support the mortgage payments.

How Can You Improve Your Credit Score Before Buying a House?

If your score is below your lender's preferred range, focus on improving your credit before applying.

Start by:

• Paying all bills on time

• Reducing outstanding credit card balances

• Keeping credit utilization below 30%

• Avoiding unnecessary credit applications

• Checking your credit reports for errors

You can request your credit reports from Equifax and TransUnion to identify issues that may affect your application.

Keep in mind that lenders may use different credit scoring models from the ones you see through consumer credit-monitoring services.

Should You Wait Until Your Credit Score Reaches 680?

Not necessarily.

A score below 680 does not automatically prevent you from buying a home. You may still qualify through certain lenders if your income, down payment and overall financial profile meet their requirements.

However, if you are not in a rush, improving your score before applying could give you more financing options.

The important thing is to get mortgage pre-approval before making an offer. This will help you understand how much you can borrow, what interest rate you may qualify for and whether your credit profile needs improvement.