What are the easier to qualify home loans in Canada?
Your credit score is really bad, and it's highly unlikely anyone will be willing to give you a mortgage, especially if you still have bad debt showing up on your credit report. What would help? Well, clearing off any bad debt would be a good place to start. Ideally, you want to get your credit rating up above 680, though that may be optimistic here. Note, though, that bad debt falls off your credit report after a while. Exactly how long depends on your province. Note that making partial payment, or even just acknowledging the debt, will reset the 'timer', however. I mention this, though, because you mention some of your debt is from 5 or 6 years ago. It may be just about to fall off. It would also help if you can show that your credit is so bad because of mistakes from a number of years ago, but you've been making payments and staying on top of all debts for the past few years, if that's the case. Also, it would help if you had a reasonable downpayment. 20% minimum, but you'll be a lower credit risk if you are able to put down 50 - 75%. You could also consider having someone with good credit co-sign the mortgage. Note that most people will not be willing to do this, as they take on substantial financial risk. All that said, there are some institutions which specialise in dealing with no credit or bad credit customers. You pay more fees and will pay a vastly higher interest rate, but this may be a good option for you. Check out mortgage brokers specialising in high-risk clients. You can also consider a rent-to-own, but almost all the advice I've ever seen say to avoid these if you can. One late payment and you may lose all the equity you think you've been building up. Note that things may be different if you are moving from the U.S. to Canada, and have no credit history in Canada. In that case, you may have no credit rather than bad credit. Most banks still won't offer you a mortgage in this case, but some lenders do target recent immigrants. Don't rule out renting. For many people, regardless of their credit rating, renting is a better option. The monthly payments may be lower, you don't need a downpayment, you don't have to pay realtor and legal fees (and pay again if you need to move). A couple of sites provide more information on how your credit rating affects your possibility of getting a mortgage, and how to get mortgages with bad credit: http://mortgages.ca/credit-score-needed-mortgage-canada/ and http://mortgages.ca/mortgage-solutions/new-to-canada-financing/, along with  http://www.ratehub.ca/mortgage-blog/2013/11/how-to-get-a-mortgage-with-bad-credit/
"So basically, the bar has been lowered due to the fact that so many people don't qualify for credit. The medical debt issue is one thing, but the fact that only 28% of home purchases these days are first time home buyers instead of 40% says more about our unaffordable higher educational system, labor market and people's ability to earn decent income than it does about credit being ""too tight"".  If anything this is a loosening of standards since the banks have no alternative in order to drum up new sales. They're 12% off the mark and they're finding ways to close the gap. Wages probably won't get better, so they're better off accepting lower quality customers and rolling the dice on their ability to pay off debts over the life of the loans they issue.  Sounding familiar?" "I dislike this argument that government pressure to make bad loans is the origin of subprime loans.   In fact, the term subprime is because those type of loans can't be underwritten by the government.  Usually the concept of government forcing bad loans, is government forcing banks to give minorities and low-income people loans for their first houses.   The government requires w-2 income and a base credit score to procure these loans.  At the peak of the bubble, the majority of home sales were for investment purposes, not homeownership purposes.   Those who declared the housing market was wildly unstable (and who were proven right) were talking about the problem of mortgage brokers being incentivized to lie about a person not being qualified for prime government loans, in order to make more money by putting them in lucrative subprime loans (or simply advising them they were better off in subprime and could get cash out up front!).  Also, liar no-doc loans were booming and speculators and house flippers were getting multiple properties in order to flip them for profit.  Once upon a time these speculators would make sure they could rent out the house for the carrying costs if they needed to.  0 down, 0 interest meant a whole different speculatory ballgame.    Ah, but maybe these speculators wouldn't have anyone to sell to if low income people couldn't get prime loans from the gov?  All evidence points to them selling to other speculators until there was no fool left to hold the bag.  See: Miami, Las Vegas, etc.  EDIT:  I forget that the argument has hopscotched from Fannie &amp;Freddie, to the end of redlining, to the CRA, and now to changes made to the CRA, where the argument finally gains a bit of traction: &gt; Law professor Michael S. Barr, a Treasury Department official under President Clinton,[63][131] stated that approximately 50% of subprime loans were made by independent mortgage companies that were not regulated by the CRA, and another 25% to 30% came from only partially CRA regulated bank subsidiaries and affiliates. Barr noted that institutions fully regulated by CRA made ""perhaps one in four"" sub-prime loans, and that ""the worst and most widespread abuses occurred in the institutions with the least federal oversight""  Further, the discussion devolves into whether the idea and enthusiasm of the rest started as a seed from the regulated banks, how much removing risk by Wall Street with non-government backed home loans through credit instruments had its origination in the CRA, and how much of the failure of ratings agencies to properly rate those credit instruments has to do with the US government and the CRA and not regular Wall Street greediness.  So originally I stated ""no relationship"" but yes, once you get into the complexity of it all I'm sure we could find a way to say a global mania in speculation in real estate is due to the American government getting poor people into their first home, and generally has nothing to do with the human condition of wanting something for nothing and getting excited when the government allows you to sell blue sky returns to foolish speculators." "Obligatory ""Don't do it"" remarks: If the guy isn't trusted enough to even show up to work, and can't get a personal loan directly from a bank (Home Equity Line of Credit would suffice), this is really setting things up for failure. What if he quits? What if you need to fire him (you know, for not showing up for weeks)? </rant> In order to be able to place a lien on his home should he default on the loan, you'll need to draft up a loan agreement or promissory note stating specifically that you have the right to do so. Get a lawyer involved.  Here's an article that talks about setting up a Private Home Loan, which is geared more at helping someone buy a home, but may prove useful in this case as well: https://www.nolo.com/legal-encyclopedia/borrowing-from-family-friends-buy-29649.html It's pretty lengthy, so I won't quote it out here, but the gist of it is: Get everything in writing in a legally binding contract." As someone with a lot of student loan debt, I can relate - the first thing you should do is read the promissory note on your current loans - there might be information there you can use.  For govt loans (stafford, etc) made after July 1, 2006 the interest rate is going to be fixed and even a federal direct consolidation is not going to lower the rates themselves.  If anything, consolidation will just increase the repayment period, which means you'll end up paying more in the long run.   Most private Loans usually offer variable interest rates, which today are quite low. But unless your financial situation is very comfortable and stable, consolidating out of federally guaranteed loans into private loans might not be the best path.  You might lose options like deferment, forbearance, and maybe even things like a death benefit (if you die, your loans die with you). related - if you have a co-signer you don't get that death benefit! But refinancing into a variable rate private loan is going to push a lot of risk to you in terms of interest rate inflation, etc. Most financial professionals will agree that interest rates can only go up in the long run. Keep in mind, student loans are completely unsecured - meaning lenders are taking a fairly large risk in loaning money (and probably why the fed govt has to guarantee most of them).  I've heard of people borrowing against their home equity to pay down student loan debt - but I can't think of a reason you'd want to substitute secured for unsecured debt and possibly lose the loan interest tax deduction.  The bottom line is you're unlikely to find an alternative lending source at a lower interest rate for an unsecured student loan.  Another option may be the income based repayment plan. If you qualify, it caps student loan monthly payments at 15% of your discretionary income (discretionary is your income minus whatever the poverty threshold income amount is). And if that 15% doesn't even cover the interest on the loans, the govt picks up the tab for the difference (for up to 3 years). You have to re-qualify every year by sending in all sorts of documentation, but if you somehow stay on IBR for 25 years, your loans are then forgiven. Obviously the downside here is that you are probably paying little to no principal, but if you do the math and determine that your IBR payment would be next to nothing, and your current situation is barely paying interest-only... well, maybe IBR isn't a bad thing for a couple of years (or 25 if you think you will never have a larger income).   Personally, I went through all these options as well and decided that my best option was to just earn more money... a 2nd job or side project here and there helps me pay down the debt faster, and with less risk, than moving to private variable rate loans. The financial reasons, beyond simply owning your home outright, are: You're no longer paying interest. Yes, the interest is tax-deductible in the U.S. (though not in Canada), but the tax savings is a percentage of a percentage; if you paid, say, $8000 in interest last year, at the 25% marginal rate you effectively save $2000 off your taxes. But, if you paid off your home and had that $8000 in your pocket, you'd pay the $2000 in taxes but you'd have $6000 left over. Which is the better deal? In Canada, the decision gets even easier; you pay taxes on the interest money either way, so you're either spending the $8000 in interest, lost forever as cost of capital, or on other things. Whatever you're earning is going into your own pocket, not the bank's. Similar to the interest, but also including principal, a home you own outright is a mortgage payment you don't have to make. You can now use that money, principal and interest, for other things. Whether these advantages outweigh those of anything else you could do with a few hundred grand depends primarily on the rate of return. If you got in at the bottom of the mortgage crisis (which is pretty much right now) and got a rate in the 3-4% range, with no MIP or other payment on top, then almost anything you can do with the amount you'd need to pay off a mortgage principal would get you a better rate of return. However, you'll need some market savvy to avoid risks.  In most cases when someone has pretty much any debt and a big wad of cash they're considering how to spend, I usually recommend paying off the debt, because that is, in effect, a risk-free way to increase the net rate of return on your total wealth and income. Balancing debt with investments always carries with it the risk that the investment will fail, leaving you stuck with the debt. Paying the debt on the other hand will guarantee that you don't have to pay interest on that outstanding amount anymore, so it's no longer offsetting whatever gains you are making in the market on your savings or future investments. My in-laws are pressuring me to buy a home.  I don't really have much financial experience. In fact, I'm a nightmare with finances. I almost have my student loans payed off from school.  My in-laws and husband are great with finances and with real-estate.  My husband has a good job and $200k in savings.  I have a good job too, and still have some debt from school. (approx $60k left of 180k).   They say the house will be available in Jan or February for purchase, and that we should really try to buy it (prob $2-3 mil).   My guess is they want to make it available to us off the market (which is a huge benefit in this area,  there are really no houses available lately) .   The problem is:  I am uncomfortable because I don't have all of my loans payed off,  I could divert money away from paying off the loans in order to save for a larger downpayment. I just got a bonus of $35k (after taxes)   I don't think I'll have all of my loans payed off by January. Should I save my money for the downpayment or focus on my loans, should I go for the house?  I don't know how to weigh these options against each other with such little experience. That's tricky. Typically you lock in the minimum monthly payment when you close the loan. You can pay more but not less. Options: The prime rate is actually the rate at which banks lend to consumers/businesses with the highest credit ratings.  The bank rate (more commonly known as the overnight rate) is the interest rate at which banks can borrow funds from the Bank of Canada or from each other.