Buying a home is one of the most significant financial steps you can take — and your credit score plays a key role in whether you’ll qualify for a mortgage in Canada. Whether you’re a first-time buyer or looking to upgrade your current home, understanding how credit scores work can help you prepare financially and increase your chances of approval. So, what credit score do you need to qualify for a mortgage in Canada? Let’s explore how lenders evaluate borrowers, what score you should aim for, and how to improve your credit before applying for a home loan.
What Is a Credit Score and Why Does It Matter?
Your credit score is a three-digit number that represents your creditworthiness — essentially, how reliable you are at repaying borrowed money. It’s based on your credit history, including how much debt you have, your payment habits, and the length of your credit accounts. In Canada, credit scores range from 300 to 900, with higher scores indicating better credit health. Mortgage lenders use this score to assess risk: a higher score means you’re more likely to be approved and qualify for lower interest rates.
Credit reports and scores in Canada are maintained by two major credit bureaus: Equifax and TransUnion. When you apply for a mortgage, lenders check your credit through one or both of these agencies.
Minimum Credit Score to Qualify for a Mortgage in Canada
The minimum credit score you need depends on the type of mortgage and lender you’re applying with.
1. Insured (High-Ratio) Mortgage – Minimum 600
Suppose your down payment is less than 20% of the home’s purchase price. In that case, your mortgage must be insured by the Canada Mortgage and Housing Corporation (CMHC) or another insurer, such as Sagen or Canada Guaranty.
To qualify for a CMHC-insured mortgage, you’ll typically need a minimum credit score of 600. However, some lenders prefer a slightly higher score, around 620–650, to feel confident about your repayment ability.
2. Conventional Mortgage – Minimum 620–680
If you’re making a down payment of 20% or more, your mortgage doesn’t require insurance. In this case, lenders have more flexibility but often expect a credit score of at least 620–680.
The higher your score, the better your chances of being approved for competitive interest rates.
3. Alternative or Private Lenders – Flexible Credit Requirements
If your credit score is below 600, you may still qualify for a mortgage through alternative lenders or private lenders. These lenders are more flexible but often charge higher interest rates and may require larger down payments or additional documentation. This route is often considered a short-term solution — for example, if you’re rebuilding your credit or are self-employed with fluctuating income.
Also read: How to Become Debt-Free in 2025
Credit Score Ranges and What They Mean
| Credit Score Range | Credit Status | Mortgage Approval Likelihood |
| 760–900 | Excellent | Easily approved with best rates |
| 725–759 | Very Good | Approved with competitive rates |
| 660–724 | Good | Approved but may not get the lowest rate |
| 560–659 | Fair | May need alternative lending |
| 300–559 | Poor | Unlikely to qualify without private lender |
Having a score above 660 is generally considered a good benchmark for securing a mortgage at favourable terms.
Other Factors Lenders Consider
Your credit score is essential, but it’s not the only factor lenders evaluate. Mortgage approval in Canada also depends on several other financial elements:
- Income Stability: Lenders want to see consistent, verifiable income — typically through employment, tax returns, or business financials.
- Debt-to-Income Ratio (GDS/TDS):
- The Gross Debt Service (GDS) ratio measures how much of your income goes toward housing costs.
- The Total Debt Service (TDS) ratio includes all other debts.
- Generally, your GDS should be below 39% and your TDS below 44%.
- Down Payment Size: A larger down payment reduces the lender’s risk and can improve your approval chances.
- Employment History: Stable, long-term employment strengthens your application.
- Credit History Length and Mix: Lenders like to see diverse credit (credit cards, loans, lines of credit) and responsible usage over time.
Also read: When Should You Refinance Your Mortgage?
How Your Credit Score Affects Your Mortgage Rate
Your credit score not only determines if you qualify but also how much you’ll pay in interest.
For example, someone with an excellent credit score (760+) may get a fixed-rate mortgage at 5.2%, while another borrower with a fair credit score (620) could be offered a rate of 5.9% or higher.
That 0.7% difference might not seem huge, but over a 25-year mortgage term, it could add up to tens of thousands of dollars in extra interest.
How to Improve Your Credit Score Before Applying
If your score isn’t where you want it to be, don’t worry — improving it takes time, but it’s entirely possible. Here are practical ways to boost your score before applying for a mortgage:
- Pay Bills on Time: Payment history has the most significant impact on your score. Set up reminders or automatic payments to ensure you never miss due dates.
- Keep Credit Utilization Low: Try to use less than 30% of your available credit limit. For example, if your credit card limit is $10,000, aim to keep your balance below $3,000.
- Avoid Opening Too Many Accounts: Each new credit application can cause a small temporary drop in your score. Apply only when necessary.
- Check Your Credit Report for Errors: Request a free credit report from Equifax Canada or TransUnion Canada once a year and dispute any incorrect information.
- Maintain Old Accounts: Length of credit history matters. Keep older accounts open, even if you don’t use them often.
- Reduce Outstanding Debts: Paying down high-interest debts like credit cards or personal loans improves your credit profile and reduces your debt-to-income ratio.
What If You Have Bad Credit?
Even with a lower credit score, you still have options. Here’s what you can do:
- Increase your down payment: Lenders may be more willing to approve your mortgage if you contribute 20% or more upfront.
- Consider a co-signer: A co-signer with good credit can strengthen your application.
- Work with a mortgage broker: Brokers can connect you with lenders who specialize in helping borrowers with imperfect credit.
- Use a short-term private mortgage: This allows you to buy a home while improving your credit for future refinancing at better rates.
Final Thoughts
Your credit score is a crucial part of your mortgage application, but it’s not the only factor lenders consider. In Canada, most borrowers need a minimum score of 600–680 to qualify with a traditional lender — though higher scores can unlock better rates and more options.
If your score isn’t ideal yet, don’t be discouraged. With consistent financial habits and careful planning, you can strengthen your credit and achieve your homeownership goals.
Before you apply, it’s wise to speak with our mortgage broker or financial advisor who can review your credit report, assess your readiness, and guide you toward the best mortgage strategy for your situation.
In summary:
- Minimum credit score: 600 for insured, 620–680 for conventional mortgages
- Higher scores = better rates and easier approvals
- Improving your credit takes time — but it’s worth it for long-term savings.
With the right approach and guidance, you can turn your dream of owning a home in Canada into reality.