In recent times, mortgages have been quite large. In the middle of 2021, the average mortgage loan was $355,000 in Canada. 

With that in mind, mortgage approval is not always the easiest thing to get in Canada. You have to prove that you have the ability to pay it off and come up with the money for an appropriate down payment. 

One big part of this is a credit score for mortgage approval. There is a minimum credit score for a mortgage in Canada that you have to reach to get approved along with other bonuses. 

So, what is an average credit score in Canada? What does it take to get approved for your mortgage? 

This guide goes over all of that and more. 

What Is a Credit Score? 

Before we can go over minimum credit score requirements, it is best to go over what credit score is and what the Canada credit score range is. 

A credit score is basically a measured score that assesses how good you are at paying your bills on time. That means meeting your monthly payments, avoiding debt, and most importantly, being on time for those payments. 

You cannot automatically get a good credit score by avoiding credit cards, so you need to actively use them to build your credit score up. Having more than one at a time that you keep up with bills helps your situation. 

In Canada, credit scores range from 300 to 900. Anything under 560 is considered to be a poor credit score. From 560-659, your score is fair. From 660-724 is considered good, 725-759 is very good, and 759+ is considered an excellent credit score. 

Average Credit Score in Canada by Age 

Now that you know how credit scores in Canada work, let’s take a look at what an average credit score in Canada is. Age is a big factor because the homebuyer varies from somebody buying their first house to somebody else buying their fifth house. 

As you can imagine, older people are likely to have better credit because they have more time to build up their scores and income. The statistics back up this theory, with people 65+ having the best credit. Here are some estimates of the average credit score in each age group:

  • Ages 18-25: 692
  • Ages 26-35: 697
  • Ages 36-45: 710 
  • Ages 46-55: 718
  • Ages 56-65: 737
  • Ages 65+: 750 

For the most part, people in Canada generally have pretty decent credit. Every age group here has at least a good credit score. However, not even the best age group has an excellent credit score, emphasizing how difficult it is to achieve that. 

Minimum Credit Score for a Mortgage in Canada

Despite the average credit scores mentioned above, there is a difference between that and the minimum that you have to meet. One of the biggest factors is how much you are contributing towards the down payment. 

There is a big benchmark to reach here because you have to put up enough to avoid mortgage insurance. Any down payment that is under 20% of the house’s value requires mortgage insurance. If you have to add this insurance, then you have a new set of restrictions that you have to face. 

That is because, for those with mortgage insurance, the minimum credit score to get approved for mortgage insurance is 680. This is according to the Canada Mortgage and Housing Corporation (CMHC). That was increased on July 1, 2020, from 600. 

This means that the standard to qualify for a mortgage loan has increased over the last couple of years and Canadians have to do more to meet these qualifications. 

However, the good news is that you have more options if you are able to meet that down payment requirement. Why is this? 

Because you generally do not need as high of a credit score if you are taking out less money. However, it does help if you have a good income to back this up. 

With some luck, you may find a lender that is willing to approve your mortgage loan if you have a credit score of around 600. Just remember that the number of lenders that will approve your score decreases as your score gets lower, so try to have one closer to 680 if possible. 

Ways Around a Minimum Credit Score 

Canada does have a few options for those that do not meet the minimum credit score requirements. The first thing that you should do, however, is work on approving your credit as fast as possible. 

If you need to buy a house immediately, one thing that you can do is buy it with someone that has better credit. So, let’s say that you want to buy it with a partner. If you have a credit score under 680 but your partner is above that, lenders are willing to approve you if just one of you meets the credit score requirements. 

Another way that you can improve your situation is by using programs to meet down payment requirements. Canada has one program called the First-Time Home Buyer Incentive. 

What this does is help people get closer to down payment requirements by giving them around 5% of the house’s value. However, at least one partner needs to be a first-time home buyer, household income can’t be above $120,000, your total amount borrowed is no more than four times your income, and are a Canadian citizen. 

If you are able to get this incentive, it could get you over 20% of the down payment and reduce your minimum credit score requirements. 

Prepare for Your Mortgage 

These are the most important factors for a minimum credit score for a mortgage in Canada. Make sure that you build up your credit before applying for a mortgage and try to get over 20% of the mortgage available for a down payment. 

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