You must have a credit score of more than 660 in order to buy a house in Ontario via mortgage application. If you have a score that is less than 660, the banks would deem you not to be creditworthy for lending purpose.
What is a credit score?
A credit score is a three-digit number that is given to a borrower based on their financial trustworthiness. The score is given based on a number of factors such as the borrower’s payment history, total debts owed, number of years of owing a debt, mix of loans owed and new debts applied for. In Canada, Equifax and Transunion are the two credit bureaus that provide credit scores and credit history report of the borrowers.
What is a mortgage and how does a credit score affect a mortgage?
Mortgage is a loan offered by a bank or any other financial institutions to the borrowers, who intend to purchase a property. The property could be a home or an investment property. Every time you apply for a loan, your banker checks your credit history and credit score to check if you are a reliable borrower who will make prompt repayment of your dues. Hence, it is important that you maintain a good credit score.
What credit score is needed for buying a house in Ontario, Canada?
It has been reported that the average cost of purchasing a home in Canada is nearly $605,000 in the year 2022, whereas as at October 2022, the average home price in Ontario is $835,090. The average property prices in Ontario are more than the average price in the whole of Canada. This is where the need for mortgage arises.
• 300 to 559: Poor credit score
• 560 to 659: Fair
• 660 to 724: Good
• 725 to 759: Very good
• 760 plus: Excellent.
Going into 2023 and in order to buy a house via mortgage in Ontario, you are required to have a minimum of 660 credit score.
Good Credit Score in Ontario
If you have a credit score lesser than 660 and you still intend to buy a house in Ontario, via mortgage, you can then consider to take a joint mortgage with someone who has a strong credit score or you can add a co-signer or if you can pitch in large down payments. Alternatively, you can work on improving your credit score, by making timely payments of loan dues and utility bills.