Buying a home is one of the biggest financial decisions in life, but for many people in the USA and Canada, a low credit score feels like a locked door to that dream. Mortgage lenders often see credit scores as a reflection of trust and reliability, making it harder for individuals with poor credit to qualify. However, the good news is that getting approved for a mortgage loan with low credit score is not impossible. With the right strategy, proper planning, and choosing the right lenders, you can still secure your path to homeownership.
Understanding Credit Scores in the USA and Canada
Credit scores may seem like just numbers, but they carry enormous weight when applying for a mortgage. In the USA, FICO scores range between 300 and 850, while in Canada, credit scores typically range between 300 and 900. In both systems, the higher the score, the better your chances of securing a favorable mortgage rate. Most traditional lenders in the USA require a score of at least 620, while in Canada, major banks often look for 650 or above. But don’t be discouraged — there are still options for applicants with lower scores.
Minimum Credit Score Needed for a Mortgage Loan
So, what’s the lowest score you can have and still get approved? In the USA, programs like FHA loans may allow approval with a credit score as low as 580 if you can provide a 3.5% down payment. In Canada, insured mortgages backed by CMHC (Canada Mortgage and Housing Corporation) can sometimes be approved with a score as low as 600. While private lenders may accept even lower scores, the trade-off often comes in the form of higher interest rates.
Best Mortgage Lenders for Low Credit Scores in 2025
If you’re searching for lenders, you need to know where to look. In the USA, lenders like Rocket Mortgage, Wells Fargo, and Freedom Mortgage offer programs for borrowers with less-than-perfect credit. FHA and VA-backed lenders also remain popular options. In Canada, lenders such as Home Trust, Equitable Bank, and certain credit unions are known for working with applicants who have low credit scores. These institutions understand that financial setbacks can happen and may offer flexible solutions for first-time homebuyers.
How to Improve Your Chances of Approval
Getting approved isn’t only about finding the right lender — it’s also about strengthening your profile as a borrower.
Saving for a Larger Down Payment
One of the best ways to offset a weak credit score is by saving for a bigger down payment. Putting down 20% or more of the home’s value shows lenders that you’re serious and reduces their risk.
Getting a Co-Signer
Having a trusted family member or friend with good credit co-sign your mortgage can significantly improve your chances of approval. Lenders will evaluate both credit profiles, giving you access to better loan terms.
Using Government-Backed Programs
Government programs remain one of the most effective tools. In the USA, FHA and VA loans are popular choices, while in Canada, CMHC offers mortgage insurance that helps borrowers with lower scores qualify.
Mistakes to Avoid When Applying for a Mortgage Loan
Many people unknowingly damage their chances by making common mistakes. Avoid applying for multiple loans at once, as each credit check lowers your score further. Don’t change jobs during the process, since lenders want proof of stable income. And finally, never underestimate the power of budgeting — falling behind on payments after approval could ruin your financial future.
Expert Tips for First-Time Home Buyers
Experts recommend checking your credit report months before applying for a mortgage. Look for errors, unpaid bills, or outdated information that could be dragging your score down. Building a strong payment history, even for small bills, can have a positive impact. Financial advisors also suggest speaking to mortgage brokers who specialize in low credit score cases, as they often have access to lenders you may not find on your own.
Conclusion: Yes, You Can Still Get Approved
While a low credit score makes the journey harder, it does not end your dream of owning a home in the USA or Canada. By choosing the right lenders, leveraging government programs, and preparing your financial profile, you can still secure a mortgage loan. Remember, every step you take to improve your credit today makes tomorrow’s approval much easier.