Bad Credit Mortgage in Canada — The Emergency Guide

You don’t get a good credit score in Canada automatically just for being a good person. Sometimes, you really need a loan, but your chances to get approval from one of the A-class lenders are dangerously close to zero. In this situation you can get a bad credit mortgage from CMB or other reputable lender. Here is how to increase your chances for approval in 2022. 

What is a Bad Credit Mortgage 

First of all, let’s talk about the basics. What is a bad credit mortgage? It’s an unsecured loan with an interest rate that’s higher than the average one. In order to get approved for a bad credit mortgage, you need to show at least some signs of a reliable borrower: it can be a stable income, a track record of payments, proof of no outstanding debts on your name, or a different document that would clearly say: yes, this person might be not perfect in terms of financial health, but they have it all under control and they will return the money. 

How to Increase Your Chances to Get Bad Credit Mortgage? 

You can take a few simple (in theory, of course) steps that will make you a more reliable person in the eyes of a lender and reduce the risks they will associate with your loan: 

  1. Get a co-signer; 
  2. Get a larger down payment; 
  3. Make sure you have no debts; 
  4. Prepare your income record; 
  5. Give more employment information. 

Now, let’s take a closer look at all the steps. Maybe one of them or two combined will be enough to finally get approval for your mortgage. 

Get a co-signer

The very first thing you should try to do is get a co-signer. Having a co-signer means that the mortgage company is sure that if you will fail to pay your loan, this person will still repay the money. Of course, not all lenders agree with this approach — but many of them do. A lot of applications for bad credit mortgages require a co-signer. 

A co-signer can be a relative, a spouse or common-law partner, an employer, or even an insurance company. In any of those cases, you will have to give some solid evidence that this person would be ready to return the money in case you will not be able to do it yourself.  If possible, get two different sources of revenue that can make this obligation. 

Get a larger down payment

If you can’t get a co-signer and still need a bad credit mortgage, the next step would be to raise a larger down payment. 

A down payment is a certain percentage of the loan you are getting, but you pay it upfront. The more you will pay down, the easier it will be for lenders to decide that you are not a risky borrower and that they can trust you with their money. Be ready to prove the source of this money. 

In most of the best cases, it will be enough for you to pay at least 20% of the loan amount — and even just 10% or 15% serves pretty well. Just like with a co-signer, it will make lenders trust you more — and they will treat your application as reliable even if your credit score is bad or nonexistent.

Make sure you have no debts

This simple, but yet very important step will guarantee that you’ll get a bad credit mortgage even if your credit score is completely zero. Again, most lenders require no outstanding debts on your name. If you can’t show them this, there is nothing they can do for you in terms of loans. 

In order to get a mortgage with no debts, you need to make sure there are no accounts, credit cards, loans, or any other debts that are open in your name. Any lender like CMB can easily check it. 

Just like with a co-signer and a larger down payment, your situation must be impeccable. If you have a negative balance on your credit card or loan, you will have to pay it off before the lender will consider your application for a bad credit mortgage. 

Prepare your income record

In most cases, a bad credit mortgage will require some evidence of a stable source of income and proof that you can afford to pay back. In the best case, you will have a stable income and no debts whatsoever — but in our case, we’re talking about bad credit here. 

Here are the documents required to prove you have a stable income in Canada in 2022:

  • An employment record of the last two years;
  • Pay stubs or other proof of income if you are, for example, a freelance specialist;
  • Pay stubs from the last two years, with a full breakdown of earnings;
  • Bank statements from the same time period, with all deductions and expenses shown on your statement. 

It’s a sad truth, but, like with the debts, it is just impossible to receive a bad credit mortgage without at least a more-or-less stable income. 

Give more employment information

Another good way to attract lenders’ attention to you is to be ready to give as much information about your job and employer as possible. The best thing you could do here is get a letter from your employer with some details about the job description, your position in the company, and how long you work there already (with all other details). If possible, get a confirmation that you work there still now.

Try to give as much employment information as you can. This is what lenders need to see in terms of employment: 

  • A very detailed employment history; 
  • Information on your primary job and your current position in the company (it can be CEO or secretary);
  • Your recent salary stats;
  • The name and contact info of your previous employers;
  • The number of your social insurance number;
  • The bank account or postal address of your company.


Getting a bad credit mortgage in Canada is not easy if you have no stable income, but if you try hard enough, it’s absolutely possible to find an option that would work for you. You can get a mortgage with no employment history or a record of payments — and even with such conditions, you’ll be able to get approved for the money.