The minimum credit score for a Canadian mortgage is 600 for CMHC-insured mortgages — the ones with less than 20% down. But 600 is a regulatory floor, not a practical target. Most major lenders require 650–680 as a working minimum, and the difference between a borderline score and a strong score is not just approval — it is the interest rate you pay for the entire term. This article is part of the Canadian credit scores hub.
On a $500,000 mortgage, the gap between a 4.75% rate (strong credit) and a 5.50% rate (marginal credit) is approximately $225/month. Over a five-year term, that is $13,500. Over a 25-year amortization with renewals at equivalent spreads, the difference compounds further. Getting your score to 720+ before applying is not a refinement — for most Canadians it is worth thousands of dollars.
Canada uses two credit bureaus — Equifax and TransUnion — both using a 300–900 scale. For mortgage applications, most major lenders pull both and use the lower of your two scores. Check both reports before applying; errors are common and can drag your score without your knowledge.
Credit Score Requirements by Mortgage Type
| Mortgage Type | Regulatory Minimum | Practical Minimum | Best Rate Score |
|---|---|---|---|
| CMHC-insured (under 20% down) | 600 | 650+ | 720+ |
| Sagen-insured (under 20% down) | 600 | 660+ | 720+ |
| Conventional A lender (20%+ down) | None set | 680+ | 720+ |
| B lender (alternative) | ~500–550 | 560+ | N/A |
| Private lender | None set | Any with equity | N/A |
The regulatory minimums for insured mortgages are set by CMHC (Canada Mortgage and Housing Corporation) and Sagen (formerly Genworth). A-lender minimums for conventional uninsured mortgages are set internally by each institution — the Big Five banks and most monoline lenders use 620–680 as the floor, but their pricing improves substantially above that.
How Your Score Affects the Rate You Pay
Credit score does not only determine whether you qualify — it determines how much you pay for the mortgage. Lenders use risk-based pricing: lower scores attract rate premiums above the best available rate.
| Credit Score Band | Rate Premium vs. Best | Monthly Difference on $500K | 5-Year Cost Difference |
|---|---|---|---|
| 760+ | Baseline | — | — |
| 720–759 | +0.05–0.10% | +$15–$30 | +$900–$1,800 |
| 680–719 | +0.10–0.25% | +$30–$75 | +$1,800–$4,500 |
| 640–679 | +0.25–0.50% | +$75–$150 | +$4,500–$9,000 |
| 600–639 | +0.40–0.75% | +$120–$225 | +$7,200–$13,500 |
| Under 600 (B lender) | +1.50–3.00% | +$430–$870 | +$25,800–$52,200 |
These figures assume a $500,000 mortgage at a 5.00% baseline rate over a 5-year term. The actual premium varies by lender, term, and loan-to-value ratio — but the directional relationship is consistent: each score tier down means a higher rate and a larger total cost.
What Lenders Look at Beyond Credit Score
Credit score is the first filter, but it is not the only one. A strong score does not guarantee approval if other factors are out of range.
Gross Debt Service ratio (GDS): Your housing costs (mortgage payment, property taxes, heating, and 50% of condo fees if applicable) must not exceed 39% of gross income under OSFI guidelines. This is the stress test’s primary debt metric.
Total Debt Service ratio (TDS): All debt payments — housing plus credit cards, car loans, student loans — must not exceed 44% of gross income. High non-mortgage debt loads can disqualify applicants with excellent credit scores because the TDS ceiling is breached.
Employment stability: Lenders prefer two or more years in the same field. A recent job change to a higher salary is generally fine; switching industries or starting self-employment shortly before applying complicates the file.
Income documentation: Salaried T4 employees need recent pay stubs and a letter of employment. Self-employed borrowers typically need two years of T1 generals and Notices of Assessment. Self-employment income is often discounted by lenders, which affects qualifying amount.
Payment history: Missed payments in the previous 24 months are scrutinised. One recent missed payment on a credit card may be overlooked; a missed mortgage or car payment in the past year is more serious.
Outstanding collections: Many A lenders will not approve an application with any outstanding collection accounts, regardless of the credit score. Collections must be resolved before applying — not just paid but ideally removed from the report.
If Your Score Is Below the Threshold
The right strategy depends on how far below the threshold you sit and how much time you have.
Score of 620–659: You are within range for some A lenders and most insured products, but at a rate premium. Six to twelve months of targeted improvement — primarily reducing credit utilisation — can push you into the 680+ range where rates improve noticeably.
Score of 580–619: A lender approval is unlikely. B lenders are accessible at a 1–3% rate premium. The question is whether waiting 12 months to improve your score saves more than the down payment opportunity cost of renting. For most Canadians, the answer is yes — the interest premium on a B lender mortgage is typically $5,000–$15,000/year more than an equivalent A lender mortgage.
Score below 580: B lenders become harder to access. Private lenders are the alternative — at 8–15% interest, with higher fees, and typically short terms (1–2 years). Private mortgage financing should be a bridge strategy, not a long-term solution. Use it to enter the market while actively rebuilding credit for a B lender or A lender refinance at renewal.
Outstanding collections: Settle these before anything else. Paying a collection and getting a deletion letter (not just a “paid” notation) is the most immediate way to improve mortgage eligibility. Call the collection agency and negotiate — many will delete the tradeline upon payment if asked directly.
How to Improve Your Score Before Applying
Three changes have the most immediate impact on credit scores in the 6–12 months before a mortgage application.
Reduce credit card utilisation below 30% (see how to improve your credit score fast). Credit utilisation — the ratio of your balance to your credit limit — is one of the most heavily weighted factors in Canadian credit scoring models. Balances above 50–60% of the limit drag scores significantly; balances below 10% have the most positive effect. Pay down revolving balances aggressively before applying. A card at $3,000/$5,000 (60%) that is paid down to $500/$5,000 (10%) can add 20–50 points within two statement cycles.
Resolve outstanding collections. Any collection account is visible to mortgage lenders. A-lender underwriters typically reject files with open collections automatically. Pay and request deletion. If the collection agency will not agree to deletion, “paid collection” is still better than an unpaid one — but deletion is worth negotiating for.
Make no new credit applications for three to six months before applying. Each hard inquiry from a new credit application reduces your score slightly and signals credit-seeking behaviour to mortgage underwriters. Avoid applying for new credit cards, car loans, or personal lines of credit in the period leading up to your mortgage application. The exception is that multiple mortgage inquiries within a 14–45 day window count as a single inquiry under the rate-shopping rules.
A-Lenders, B-Lenders, and Private Lenders
Understanding the lender tier matters when your credit score falls short of major bank minimums.
A lenders are the major chartered banks (RBC, TD, Scotiabank, BMO, CIBC), credit unions, and monoline lenders (First National, MCAP, Radius) who originate insured and conventional mortgages at best-market rates. They require the strongest credit profiles.
B lenders are federally or provincially regulated alternative lenders — Home Trust, Equitable Bank, CMLS, and others — that accept higher-risk borrowers at higher rates. Their rates are typically 1–3% above equivalent A-lender rates. They are often used as a bridge: borrow at a B lender rate, rebuild credit, and refinance to an A lender at renewal.
Private lenders are individuals or private mortgage companies that lend outside the regulated system. Rates range from 8–15%+, with lender fees of 1–3% of the mortgage amount. They are the lender of last resort — useful for short-term bridge situations but never an appropriate long-term mortgage.