Personal Finance

What Is The Minimum Credit Score for A Mortgage In Canada

Getting mortgage approval these days may be difficult, especially with property prices continually rising. In Toronto, for example, a home will set you back over $820,000, over $100K higher than the previous year’s average.

While most Canadians try to build up a substantial sum for a down payment, the great majority of them must rely on a mortgage to purchase a new house. However, your financial health, particularly your credit score, will determine your qualification for a mortgage and what sort of rates you receive.

What Is The Minimum Credit Score

In this article, we’ll spill all you need to know about credit score criteria for Canadian mortgages. For more articles on mortgages in Canada, visit Mortgage Maestro.

Minimum Credit Score For A Mortgage In Canada

You might be wondering why Canadian lenders are so concerned about their credit scores.

  • A strong credit score demonstrates to lenders that you can pay your payments on time.
  • It can also help you qualify for lower mortgage rates, allowing you to save money on your monthly mortgage payments.

The interest rate received on your mortgage is vital because even a slight difference in interest rates may influence how much you pay in interest.

The minimum credit score required for mortgage approval in 2021 is 640. However, anywhere between 620 and 680 would be considered a minimum, depending on the lender. Note that the credit score necessary to obtain a mortgage in 2021 is also dependent on several other criteria relating to the borrower.

A borrower with a high income to low debt load, for example, may be able to get away with a somewhat lower credit score than a borrower with a low income and a large debt load.

In Canada, your credit score goes from 300 to 900, with 900 being the perfect number. It’s best if your score is between 780 and 900. If your credit score is between 700 and 780, you have a high score and should have no difficulty at a lower interest rate.

When your credit score drops to 625 or lower, it is considered insufficient, and it will become increasingly difficult to qualify for the lowest mortgage rates.

Above 600 is an excellent credit score because it offers up more choices. When it comes to comparison shopping for a mortgage, having more alternatives gives you more flexibility.

Popular banks, such as RBC and TD, may provide affordable mortgage rates, but banks and credit unions often have more strict standards that go beyond your credit score. This can include things like your income and work history.

Tips For Improving Credit Score

There are various things you can do to enhance your credit score. You may obtain lower interest rates on loans and secure higher credit card limits by implementing these strategies.

Resolve Any Remaining Debt

If you have any unpaid credit card bills or loans, you must pay them off right away to restore or enhance your credit score. When generating a credit score, one of the variables that are taken into account is payment history.

Your credit score will be considered low if you have a history of late payments and vice versa. To ensure that you pay your credit bills or EMIs on time, you should set up payment notifications or use the auto-debit feature.

Watch Your Credit Card Use

The quantity of credit you have is more crucial than you may believe. The credit usage ratio on your credit report is the percentage of your credit card debt to your credit limit.

Never put more than 30% of your available credit limit to use. For example, keep your overall amount under $3,000 even if you have a total credit limit of $10,000.

Make Timely Payments On Your Bills

On-time payment of bills accounts for 35% of your credit score. It’s the most significant element that influences your credit score, so make sure you keep up with your monthly bill payments.

Late or missed bill payments can lower your credit score; even one missed bill payment can reduce your credit rating by up to 150 points.

Look At Your Credit Report

The credit reporting agency is required to provide you with one free credit report per year that doesn’t affect your rating for the request.

Make sure to examine each piece thoroughly and address any mistakes you find. Notifying the credit reporting bureau of inaccurate or outdated information will enhance your credit score when the incorrect data is deleted.

Reduce The Debt-to-Income Ratio

The debt-to-income ratio, often known as DTI, is a financial metric that compares the monthly debt payment to your total income. It is used by lenders to determine your ability to handle monthly income and pay debts.

Divide your entire monthly debt (such as a mortgage, auto loan, or credit card) by your monthly income to get your debt-to-income ratio (DTI). Lenders see a healthy balance between the quantity of debt you have and the amount of money you make if you have a low debt-to-income ratio.

Consider The Credit Mix

Your credit mix, or the various loan products in your credit history, has a minor impact on your credit score but is still essential to examine. Your ability to appropriately manage various forms of finance, including credit cards, secured loans such as mortgages, and personal loans, are typically factored into scoring models.

Consider taking out a low-interest loan that you know you can pay back on time if you think your credit mix needs to be diversified. While having a favourable credit mix might help you get an outstanding credit score, you should avoid taking on any debt you don’t need or can’t repay.


You have the best chance of qualifying for the lowest mortgage rates in Canada if your credit score is 680 or higher. However, if your credit score is between 600 and 680, you may still be able to get a mortgage but at a higher interest rate.

If you don’t need to find a new house right away, we encourage taking measures to establish and enhance your credit score, especially if you have none. By doing so, you may position yourself to qualify for the best mortgage rates, save money, and pay off your mortgage faster in the future.

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About the author

Ashley Judd

My name is Ashley Judd, I’m 27 years old, I’m currently studying MA Accounting and Finance (yes I love numbers) at university in Nottingham. I write down all my thoughts and perceptions and to ramble on about anything and everything.