Can You Get a Mortgage With a Consumer Proposal?

What happens to your existing mortgage when you file a consumer proposal

Your existing mortgage is not affected by a consumer proposal. You keep your home as long as you keep making your mortgage payments on time.

A consumer proposal is a legal agreement under the Bankruptcy and Insolvency Act where you repay part of your unsecured debts over up to 5 years. Your creditors forgive the rest.

Your mortgage is secured debt. The lender holds a charge against your property, so the mortgage is not included in the consumer proposal. You owe them the full amount on your original terms.

How a consumer proposal affects your credit report

When you file a consumer proposal, both Equifax and TransUnion assign an R7 rating to the debts included in the consumer proposal. R7 means you have made a formal arrangement to repay your creditors. For comparison, R1 is a perfect rating, and R9 is bankruptcy.

Both credit bureaus remove a consumer proposal from your credit report three years after you pay off all the debts included in the consumer proposal, or six years after you sign the consumer proposal, whichever is sooner.

Source: Financial Consumer Agency of Canada – How long information stays on your credit report

What that actually means is this: if you complete a five-year consumer proposal, the record falls off three years later, for a total of 8 years from the filing date. If you pay the consumer proposal off in two years, the record disappears three years after that, just five years from filing. The faster you finish, the sooner your credit recovers.

Can you get a new mortgage while a consumer proposal is active

Traditional lenders rarely approve mortgages during an active consumer proposal because they are concerned about both the insolvency proceeding and the low credit score, which is often in the low 500s.

What B lenders and private lenders offer during a consumer proposal

B lenders are alternative financial institutions, including trust companies and mortgage investment corporations, that accept higher-risk borrowers.

Private lenders are individuals or corporations that lend against the equity in your property. Both are options during an active consumer proposal, but they cost more.

As of 2026, B lender mortgage rates range from about 1% to 2% above A lender (big bank) rates. For a borrower in an active consumer proposal, the premium is at the higher end of that range or above.

Private lender rates range from 7% to 13%, depending on the property and your equity position.

B lenders and private lenders also charge fees that traditional banks do not. A 1% lender fee on a $300,000 mortgage is $3,000. Legal and appraisal fees add another $1,500 to $2,000 to that.

These mortgages are meant to be temporary. The goal is a one-to-three-year term, then you refinance with a traditional lender once your credit improves and the consumer proposal is removed from your credit report.

What credit score do you need for a mortgage after a consumer proposal

The credit score you need depends on the type of lender and whether you need mortgage default insurance.

CMHC-insured mortgage requirements

If your down payment is less than 20%, you need mortgage default insurance from CMHC, Sagen, or Canada Guaranty.

As of July 2021, CMHC requires a minimum credit score of 600 for at least one borrower. CMHC also caps your gross debt service ratio at 39% and your total debt service ratio at 44%.

Source: CMHC – Reviews Underwriting Criteria, July 2021

A consumer proposal drops your credit score to the low 500s. CMHC needs 600.

You cannot qualify for a CMHC-insured mortgage until your score recovers above that threshold, which typically takes at least two years of active credit rebuilding after the consumer proposal is complete.

Score thresholds by lender type

A lender (big bank) mortgages generally require a credit score of 680 or higher. B lender mortgages accept scores as low as 500-600, depending on your equity and income. Private lenders focus on the property value and your equity rather than your credit score.

The lower your credit score, the higher the interest rate. A borrower with a 620 score pays more than a borrower with a 700 score at the same B lender.

Lender type	Minimum credit score	Minimum down payment	Typical rate premium over A lenders
A lender (bank)	680+	5% (insured) or 20% (uninsured)	None (best rates)
B lender	500 to 650	20%	1% to 2% higher
Private lender	No minimum	20% to 25%	3% to 8% higher

How CMHC insurance rules affect you after a consumer proposal

CMHC mortgage default insurance is required when your down payment is less than 20% on a home priced under $1.5 million. As of December 2024, the maximum purchase price for a CMHC-insured mortgage increased from $1 million to $1.5 million.

Source: CMHC – Mortgage Loan Insurance Explained

After a consumer proposal, the CMHC insurance requirements create a practical barrier. You need a credit score of at least 600, a GDS ratio under 39%, a TDS ratio under 44%, and you cannot borrow your down payment.

Your down payment must come from savings or a non-repayable gift.

Source: CMHC – General Requirements to Qualify for Homeowner Mortgage Loan Insurance

If your credit score has not recovered to 600, you will not qualify for CMHC insurance. That means you need at least 20% down and an uninsured mortgage, which limits you to B lenders or private lenders at higher rates.

How to rebuild credit after a consumer proposal to qualify for a mortgage

Start rebuilding your credit as soon as your consumer proposal is filed. Get a secured credit card, use it for small purchases, and pay the balance in full every month. This creates a record of on-time payments that lenders check when you apply for a mortgage.

Keep your credit utilization under 30% of your available limit on every account. If you have a $500 secured credit card, keep the balance under $150 at all times.

After six months to a year with a secured credit card, consider adding a second credit product. A small instalment loan or a credit builder loan reported to both Equifax and TransUnion strengthens your file. Lenders like to see more than one type of credit managed responsibly.

What lenders check when you apply

Lenders look at three things after a consumer proposal: your credit score, your income stability, and your debt-to-income ratio.

Your gross debt service ratio is your monthly housing costs (mortgage payment, property taxes, heating, and half of any condo fees) divided by your gross monthly income. Your total debt service ratio adds all other debt payments to housing costs, then divides the result by gross income. CMHC caps these at 39% and 44%.

Source: Financial Consumer Agency of Canada – Preparing to get a mortgage

Self-employed applicants face stricter requirements because their income is harder to verify. Lenders want two years of tax returns and proof of consistent earnings before they approve a self-employed borrower with a consumer proposal in their history.

Check your credit report regularly with both Equifax and TransUnion. Errors are common. If your consumer proposal is marked incorrectly or old debts still show as active, dispute them immediately.

Frequently asked questions

Can you keep your house if you file a consumer proposal?

Yes. Your house is not affected as long as you keep making your mortgage payments.

A consumer proposal only covers unsecured debt. Secured debts, such as mortgages and car loans, are excluded from the consumer proposal.

How long does a consumer proposal stay on your credit report?

Both Equifax and TransUnion remove a consumer proposal from your credit report three years after your final payment, or six years from the filing date, whichever comes first. If you complete the consumer proposal early, the record falls off sooner.

Can you get a mortgage with a consumer proposal still showing on your credit report?

Yes, but your options are limited and expensive. Most A lenders will not approve your application while the consumer proposal is still on your report. B lenders and private lenders approve applicants sooner, but at higher rates and with larger down payment requirements, typically 20% or more.

What credit score do you need for a mortgage after a consumer proposal?

For a CMHC-insured mortgage with less than 20% down, you need a minimum score of 600. A lenders (banks) generally want 680 or higher.

B lenders accept scores between 500 and 650. Private lenders focus on property equity rather than credit score.

Do you need a bigger down payment after a consumer proposal?

In most cases, yes. If your credit score is below 600, you cannot qualify for CMHC insurance, which means you need at least 20% down.

B lenders and private lenders typically require 20% to 25%, even if your score is recovering. A larger down payment reduces the lender’s risk and improves your chances of approval.

Can you use CMHC insurance with a consumer proposal on your credit report?

You can, but only if you meet all of CMHC’s requirements: a credit score of at least 600, a GDS ratio under 39%, a TDS ratio under 44%, and a down payment from savings or a non-repayable gift. Most people cannot reach these thresholds until at least two years after their consumer proposal is complete.

Should you use an alternative lender after a consumer proposal?

An alternative lender is sometimes the only option, but treat the mortgage as a stepping stone. Take a one-to-three-year term, use that time to rebuild your credit, and refinance with a traditional lender as soon as you qualify. The higher rates and fees are temporary if you have a plan to move on.

How long after a consumer proposal should you wait to apply for a mortgage?

You can apply at any time, but your chances of approval are low until the consumer proposal is complete and you have rebuilt credit for at least two years. Most mortgage brokers recommend waiting until the consumer proposal is no longer on your credit report.

Does a consumer proposal affect mortgage renewal?

Your existing lender renews your mortgage based on your payment history with them. If you have made every mortgage payment on time during your consumer proposal, renewal with the same lender is straightforward.

Problems arise if you want to switch lenders at renewal. The new lender runs a full credit check and sees the consumer proposal on your report.

What debt-to-income ratio do lenders want after a consumer proposal?

For CMHC-insured mortgages, your gross debt service ratio cannot exceed 39%, and your total debt service ratio cannot exceed 44%. These are the same limits that apply to all borrowers, not just those with a consumer proposal. B lenders have slightly more flexibility, but they still need to see that you can afford the payments.

Talk to a Licensed Insolvency Trustee

If you are worried about how a consumer proposal will affect your ability to buy a home, talk to a Licensed Insolvency Trustee. The initial consultation is free and confidential.