Looking for Bad Credit Mortgage Options in Ontario?

360Lending is an award-winning mortgage brokerage based in Richmond Hill, Ontario. Over 2,000 homeowners in Ontario have given us 5-star reviews and we have an A+ rating from the Better Business Bureau.

We help homeowners get the lowest rates for home equity loans, home equity lines of credit, refinancing, and other mortgage products.

To explore your bad credit mortgage options, click here to schedule a call with our team.

If your credit score is low, getting approved for a mortgage can feel like trying to climb a mountain. But the truth is, in Ontario, you still have options—even with bad credit. Whether you’re trying to buy a home, refinance your mortgage, or tap into your home equity to pay off debt, it’s still possible to get approved.

Credit Score Needed for Mortgage in Canada

When applying for a mortgage, your credit score is one of the first things a lender will check. It gives them a quick snapshot of how you’ve handled debt in the past. But not all lenders have the same requirements.

Here’s how it usually breaks down:

Major banks (A lenders): These lenders typically want to see a score of 680 or higher. If your score is below that, chances are they’ll say no—even if you have good income and lots of equity.

B lenders: These lenders are a little more flexible. They’ll often approve borrowers with scores as low as 500-550, especially if your income is stable and your debt levels are manageable.

Private lenders: These lenders don’t rely on your credit score at all. Instead, they look at your home’s value and how much equity you have. That said, your credit score can still affect the interest rate you’re offered.

So, while a high score opens more doors, a low score doesn’t mean you’re out of options—it just means you’ll need to take a different path.

Using a Home Equity Loan to Consolidate Debt

If you’re a homeowner with bad credit and high-interest debt (like credit cards or payday loans), a home equity loan can be a smart way to get back on track. Here's how it works:

Let’s say your home is worth $600,000, and you still owe $300,000 on your mortgage. That means you have $300,000 in equity. Even if your credit score is low, you may still be able to borrow against that equity to consolidate your debts.

Here’s what a home equity loan can do for you:

Cut your interest rate in half (or more) – Most unsecured debt comes with rates of 19% or higher. Current interest rates for a home equity loan starts at 6.99%.

Lower your monthly payments – Home equity loans also have lower payment requirements so your monthly payment could drop by 50% or more.

Improve your credit score – Once those high-interest debts are paid off, your score can start to improve in as little as 90 days.

But the real key here is having a plan. That’s why it’s so important to work with a mortgage broker who understands bad credit. They won’t just get you a loan—they’ll help you build a path back to A lender status, where rates are lower and terms are better.

How to Get a Mortgage with Bad Credit in Ontario

If you have bad credit, your best move is to talk to a licensed mortgage broker who specializes in helping people in your situation. A mortgage broker who specialize in helping bad credit borrowers knows which lenders will consider your application—even if your credit score is low.

At 360Lending, we have helped thousands of Ontario homeowners get approved for a mortgage, even with a bad credit history. You can click here to schedule a call with our team.

Your broker should look at your full financial picture, including your income, debts, property value, and goals. They’ll help you understand how much you can borrow, what the interest rate will be, and what documents you’ll need.

How Credit Scores Affect Your Mortgage Approval

Your credit score affects more than just whether you’ll be approved—it also plays a big role in the rate you’ll pay and the type of lender who will work with you.

Prime lenders (banks) need 680+ to offer you their best rates. If your score is lower, they usually won’t consider your application.

B lenders have a lower minimum score between 500-550. You’ll still qualify for a mortgage, but your rate will be higher than what banks offer—usually around 1–2% more.

Private lenders don’t have minimum score requirements, but they charge higher interest rates depending on risk factors like credit, income, and how much equity you’re using.

In short, the lower your score, the higher your rate. But the good news is: that’s temporary. If you use the mortgage to consolidate debt and rebuild credit, you could refinance at a lower rate within 12 months.

B Lenders in Ontario for Bad Credit Mortgages

Outside of the Big 6 banks in Canada, there are 100+ NHA approved mortgage lenders in Canada. B lenders provide a suite of solutions for borrowers who do not qualify with the major banks due to credit or income qualifications.

These lenders include trust companies, credit unions, and some smaller financial institutions. They specialize in helping borrowers with:

Bad credit

Self-employment income

Past bankruptcies or consumer proposals

High debt loads that banks would decline

But here’s something important to know: you can’t apply to most B lenders directly. You have to go through a licensed mortgage broker, because these lenders don’t deal with the public.

Working with a broker gives you access to these lenders—and more importantly, helps you present your application in the best possible light.

Bad Credit Mortgage Interest Rates in Ontario

Now let’s talk about what kind of rate you can expect if you have bad credit.

For first mortgages, if major banks are around the mid-4%, the b lenders are around the mid-5%.

HELOCs with B lenders currently start at 7.49%, and that number goes up if your loan-to-value ratio is high or if your credit score is very low.

Home equity loans with private lenders can start at 6.99% and the loan sizes are generally much smaller than first mortgages.

In comparison with credit cards, if you are using a home equity loan to pay off debt that’s costing you 19% or more, you are coming out significantly ahead.

Documents Required For Bad Credit Mortgages

Even if your credit score is low, the lender still wants to know you can repay the loan. That’s why documentation is key.

Here’s what most lenders will ask for:

Mortgage statement (if you already have a mortgage)

Property tax bill

Proof of income – This can be pay stubs, bank deposits, or tax documents (T4s, NOAs, etc.)

ID and property details

List of debts to be paid off if you’re consolidating

If you’re self-employed or have irregular income, don’t worry—your broker can help present your income in a way that makes sense to the lender. The most important part is being upfront and organized.

How to Get a Mortgage with Bad Credit in Ontario

Having bad credit doesn’t mean you can’t get a mortgage. In Ontario, there are plenty of solutions available—as long as you have equity in your home and the right guidance. Whether you need to pay off high-interest debt, access funds for renovations, or just get breathing room from your bills, a home equity loan or bad credit mortgage can help you take the next step forward.

But remember: it’s not just about getting a loan. It’s about using that loan strategically to clean up your finances, rebuild your credit, and open the door to better rates in the future.

The smartest move you can make? Start with a conversation. A good broker will listen, assess, and build a roadmap that gets you from where you are to where you want to be—without judgment and without pressure.