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Low Credit Score Mortgage {goes beyond the banks}

From getting a bad credit score mortgage to second mortgage home loans


Low credit score mortgage -- Is there such a thing ? Banks don't want to lend money if you have credit problems, even minor ones. Anything below 620 credit score can be considered too low for bank financing.

good or bad credit mortgage ?

There are many components to credit reports and scores that get evaluated to determine your credit worthiness, not just the score. Lenders look at your whole picture to decide whether you're a good or bad credit mortgage risk, as follows:

  • The number of active trades you have,
  • Type of these trades, installment or revolving,
  • How long have these trades been open,
  • Credit limits and how close to the limit are you drawn,
  • Late payments, two late payments will set you back two years from getting a bank mortgage.

Occasionally, if the mortgage amount vs the home value is low and there are good reasons why the credit score has slipped temporarily, banks might consider giving you a mortgage.

Clients often go from bank to bank shopping for a mortgage thinking that just because one bank turned them down, another one will not. That is a mistake -- you need a bad credit mortgage lender. All banks have the same credit qualifying guidelines, so if one turned you down, all will. Each bank you go to will pull your credit -- all this shopping around will only drive your credit score lower, making it even more difficult for you to get a mortgage.

what is a low credit score mortgage ?

A low credit score mortgage is alternative mortgage financing, available through the broker channel non bank lenders. In addition to bad credit mortgage clients, this financing is also suitable for:

  • Clients who don't fit the traditional bank lending guidelines,
  • Self employed or commissioned borrowers without no proof of income on CCRA tax returns,
  • Salaried or hourly paid clients whose income is not enough to meet the banks' debt service requirements,
  • Sophisticated real estate investors.

There are differences between alternative mortgage financing and a bank mortgage.

  • The interest rate for a bad credit score mortgage is higher than a bank rate. How much higher you ask? Well, that depends on your credit score and your overall financial resume.
  • If you are buying a home and need alternative mortgage financing then be prepared to have a larger down payment, a minimum of 15% down.
  • The amount of money you will get also depends on the credit score as well as the quality and location of the property. You may get anywhere from 65% - 85% of home value. 

What happens if you're buying a home and can only get 65% from alternative mortgage lenders ?

That's when second mortgage lending can make up the difference.

Second mortgage info

Second mortgage home loans are used to top off the first mortgage -- both to buy a house or when refinancing home mortgage. A second mortgage lender is mainly concerned with the property quality, location and the amount of equity available. 

You can get second mortgage home loans up to 85% of purchase price and to refinance home equity mortgage. Usually, it's a one year term interest only 2nd mortgage to keep your monthly payments low.

For more second mortgage info and articles, follow links at the bottom of this page.

Marie Copeland, FSU, Mortgage Broker

Back to top of low credit score mortgage.

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The bank turned me down for a mortgage -- sound familiar ?

Many of our clients were turned down by their bank before they came to us and got a mortgage. I love helping good people get a fresh start.

Call 905.537.8815, or

Banks and "A" Lenders pay us for your service. EXCEPT bad credit mortgages, some self employed mortgages, private mortgages or multi-use and commercial loans - broker fees are payable by clients. 

*Lenders change their products and interest rates without notice.

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