This Weeks Rates:
Insured:
- 5-year fixed: Starting at 3.79%
- Variable: Starting at 3.44%
Insurable:
- 5-year fixed: Starting at 3.89%
- Variable: Starting at 3.65%
Conventional:
- 5-year fixed: Starting at 4.09%
- Variable: Starting at 3.85%
CMB:
- 5-Year: 3.12%
- 10-Year: 3.68%
Scott Dillingham is a licensed mortgage broker who has helped clients finance over $1 billion in real estate. Scott works closely with REALTORS® across Canada to help their clients get financing approved — even in challenging situations. In this episode, Scott breaks down one of the most common roadblocks REALTORS® face: clients who want to buy but have bad credit. Whether it's a primary residence, a rental property, or a commercial investment, there are more options available than most people realize.
When it comes to residential purchases with less than 20% down, a credit score under 600 typically disqualifies a client from a CMHC-insured mortgage. However, clients with 20% or more down can still move forward — often through B lenders or, in more severe credit situations, through private lenders. Scott explains that bad credit is not always permanent or even accurate. The first step he recommends is having every client pull their own Equifax report and review it for errors. Late payments that were incorrectly recorded, or payments made under an informal arrangement that was never honoured by the creditor, can often be disputed and removed, resulting in an immediate credit score boost.
For rental and investment properties, the same credit thresholds apply, with the added requirement of 20% down in all cases. But Scott emphasizes that using a B lender or private lender doesn't have to be a long-term situation. He shares a recent client success story where a borrower with a consumer proposal and multiple late payments was guided to pay off all outstanding debts, maintain clean payment history for six months, and then transition from a private lender to a B lender — with a clear path back to an A lender within a year or two. This structured credit recovery approach turns a "no" into a timeline with a plan.
For clients with very poor credit scores, commercial lending can be a game-changer. Unlike residential mortgages, commercial lenders focus on whether the property can carry itself — meaning the rental income covers the mortgage — rather than the borrower's personal credit score. Scott shares an example of a client with a mid-400s credit score who secured financing on a duplex at an A lending rate through the commercial channel. While commercial loans do carry a broker fee since lenders don't pay brokers directly, the trade-off is access to rates in the mid-to-high 4% range on a five-year fixed, compared to 6–7% at a B lender or up to 12% through private lending. The savings are substantial.
Key Takeaways
- Clients with under 600 credit and less than 20% down cannot qualify for CMHC insurance — they need at least 20% down to have any path forward with a lender.
- Disputing inaccurate items on a credit report can result in an immediate score increase — clients can file disputes directly through Equifax's website, by mail, fax, or email, with results in two to six weeks.
- Creditors must provide proof of a late payment to uphold a dispute — if they can't provide documentation, the item is removed even if the late payment occurred.
- B lenders and private lenders are short-term tools, not permanent solutions — the goal is always to create a structured plan to move clients back to A lending as credit improves.
- Rental properties always require 20% down regardless of credit — clients with bad credit will be placed with B or private lenders, but a recovery timeline can be built.
- Commercial lending does not heavily weigh personal credit scores — approval is based on whether the property's rental income can carry the mortgage, opening doors for clients with very poor credit.
- Clients with credit scores in the 400s can access A lending rates through commercial financing — rates in the mid-to-high 4% range are achievable even for clients traditional lenders would decline.
- Every bad credit client is a future referral and a relationship worth building — setting a clear mortgage roadmap today creates loyal clients and ongoing REALTOR® opportunities tomorrow.
Show Resources
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Links and Show References
No external resources were mentioned in this episode.
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Are you a REALTOR® looking for a trusted mortgage partner? Visit LendCity.ca to refer your clients to Scott and his team — and give them the best chance of getting approved, no matter their credit situation.
- (00:00) - Welcome & Episode Overview
- (00:39) - Bad Credit with Less Than 20% Down
- (01:19) - How to Dispute Your Credit Report
- (02:13) - Using B Lenders & Private Lenders
- (02:29) - Rental Properties with Bad Credit
- (02:57) - Building a Short-Term Credit Recovery Plan
- (03:54) - Commercial Lending: When Credit Score Doesn't Matter
- (05:04) - Commercial Rates, Fees & Savings
- (06:02) - Key Takeaways & Wrap-Up
Show Resources:
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We do this to help you grow. Please share with a friend!