Subprime Mortgages in Ontario

A subprime mortgage in Ontario is a home loan for borrowers who don’t qualify at a major bank because of credit score, income documentation, or an urgent timeline. Subprime lenders — B-lenders and private lenders — approve the loan based on home equity rather than credit history, typically lending up to 75% of the property’s value.

You will also see it written sub-prime, and called a non-prime or alternative mortgage — different labels for the same lending tier. In Ontario, if you have enough equity in your property, you can usually qualify even with a credit score below 600. Ontario is the largest market in Canada for subprime loans, and it is the core of what we do at Mortgage Broker Store — as both a licensed brokerage and a direct private lender.

In short: own a home in Ontario with 25%+ equity, and there is very likely a mortgage available to you, regardless of what the bank said.

Do Subprime Mortgages Still Exist in Canada?

Yes — subprime mortgages still exist in Canada, but they work differently than the US loans that caused the 2008 financial crisis. In Canada, subprime lending is done by B-lenders and private lenders who approve borrowers based on home equity rather than credit score, with loans typically capped at 75% of the property’s value. This equity cushion is why Canada’s subprime market did not collapse the way the American market did.

The word “subprime” earned a bad reputation in 2008, when US lenders issued high-ratio loans to borrowers with no equity and no ability to repay. Canadian subprime lending is structured to avoid exactly that: the loan-to-value cap means the borrower always retains meaningful equity, and most loans are short one-year terms designed as a bridge back to bank financing — not a permanent high-interest mortgage.

Why Banks Decline Mortgages in 2026

Most of our subprime clients were declined by a bank first. The usual reasons:

• The stress test. Federally regulated banks must qualify you at a rate roughly 2% above your actual contract rate. Many borrowers can comfortably afford the real payment but fail the inflated test — subprime lenders qualify you on equity instead.
• Income documentation. Banks want salaried T4 income. Self-employed borrowers, commission earners, and small-business owners with legitimate but tax-optimized income often can’t satisfy them. B-lenders and private lenders accept bank statements, contracts, and stated income supported by equity.
• Credit score cutoffs. Below roughly 650, bank options narrow fast; below 600 they mostly disappear. Subprime lenders have no minimum credit score — a low score affects your rate, not your approval.
• Urgency. Banks take weeks. If you’re facing a power of sale, a closing deadline, or CRA arrears, you may not have weeks. Private funding can move in days.

These federal rules (the “B-20” guideline and the stress test) apply to banks — not to private lenders, and only partially to B-lenders. That regulatory gap is why the subprime market exists and keeps growing.

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Subprime, Sub-Prime, Non-Prime, B-Lender, Private Lender: What’s the Difference?

First, the terminology: subprime, sub-prime, and non-prime all describe the same thing — mortgage lending below the banks’ “A” tier. “Non-prime” is the industry’s current preferred term for this lending tier, though most borrowers still search “subprime.” In Ontario, “subprime lender” is used more or less interchangeably with “private lender” — but there’s a spectrum, and knowing where you fit saves money:

	Bank (“A lender”)	B-Lender / non-prime	Private lender
Best for	Strong credit + provable income	Decent credit, non-traditional income	Low credit, urgency, unusual property, power of sale
Minimum credit score	~650+	~550–600	None
Income proof	Full documentation	Flexible (bank statements)	Minimal — equity-based
Typical rates	Lowest	Bank rate + 1–2%	8%–12% (our current pricing)
Approval speed	Weeks	1–2 weeks	Days
Max loan-to-value	Up to 95% (insured)	~80%	75%

Most borrowers who search “subprime mortgage” end up with either a B-lender or a private lender. As a brokerage that also lends directly, we place your file wherever it fits best — see private mortgage lenders in Ontario, bad credit mortgages in Ontario, and home equity loans in Ontario for the neighbouring options.

Who Qualifies for a Subprime Mortgage in Ontario?

Qualification is equity-first. The checklist:

• Equity: your total mortgages after this loan stay within 75% of the property value in cities and towns with an active resale market (65% in rural areas, Thunder Bay, and Windsor; 50% in very rural communities under 10,000 people).
• Credit score: no minimum. Sub-600 scores qualify routinely.
• Income: flexible — self-employed, commission, pension, or recovering from a gap are all workable.
• Loan size: $30,000 to $500,000; larger files case-by-case.
• Property: residential property in Ontario — houses, condos, multi-unit, and many rural properties.

If you’re not sure about your equity position, that’s literally the first thing we check in a free review — usually the same day you call.

Subprime Mortgage Rates and Fees (2026)

Since subprime borrowers usually carry lower credit scores, rates are higher than bank rates. In Canada, you can expect subprime rates between 8% and 12%. The rate is driven mainly by loan-to-value — not by your credit score — whether you need a first or a second mortgage:

First mortgage	Rate	Second mortgage	Rate
up to 55% LTV	8.49%	up to 60% LTV	10.49%
up to 65% LTV	9.49%	up to 70% LTV	11.49%
up to 70% LTV	10.49%	up to 75% LTV	11.99%
up to 75% LTV	11.49%

The full cost picture (no surprises at closing):

• Lender fee and broker fee: 2%–3% each (combined 4%–6%, $3,500 minimum combined)
• Appraisal: about $600 + HST and up, paid directly to the appraiser
• Application fee: $375
• Legal: roughly $1,500–$3,000 (lender’s lawyer + your independent legal advice)
• Properties in an active legal proceeding (power of sale, foreclosure): add about +2% to the rate

Full, current details on one page: Lending Guidelines & Pricing — that page is the source of truth for every figure above.

Subprime Financing Options

Two payment structures are common:

• Amortized — each payment covers interest plus principal, like a bank mortgage. Available from most B-lenders.
• Interest-only — payments cover interest only, keeping monthly cost low; the principal is repaid when you refinance back to a bank or sell. This is standard with private lenders and suits borrowers whose situation is improving — most also accept lump-sum payments to reduce principal.

Most subprime terms run one year, by design: the plan is credit repair or income stabilization, then an exit to cheaper institutional financing. We map that exit strategy with you before you sign, not after. For a deeper look at how private financing works, read our complete guide to private mortgage lending.

Are We a Broker or a Lender? Both — Here’s What That Means for You

Mortgage Broker Store is a licensed Ontario mortgage brokerage that is also a direct private lender. In practice: when your file fits our own lending criteria, we can fund it directly — which means faster decisions and no waiting on a third party. When another lender in our network is the better fit (lower rate, larger amount, special property type), we place it there instead. Either way you deal with one team, one assessment, and one honest answer about which route is cheaper for you.

Subprime Mortgage Lenders in Toronto & the GTA

Toronto and GTA files make up the largest share of the subprime mortgages we arrange — and Toronto borrowers have a structural advantage: property values. With many Toronto homes valued above $1 million, even an owner carrying a first mortgage and significant debt often still sits below the 75% loan-to-value cap, which is what approval depends on. Condos qualify too; lenders look a little harder at maintenance fees and building status, but GTA condos are routinely funded. Files in Toronto and the GTA also tend to close fastest — appraisals, title work, and legal all move quicker than in smaller markets.

We arrange subprime and private mortgages across the entire GTA — Toronto, Scarborough, North York, Etobicoke, Mississauga, Brampton, and beyond. See also: private mortgage lenders in Toronto.

How It Works

1. Call or send the form — property address, estimated value, current mortgage balances, and what you need.
2. Same-day equity review — we tell you what’s realistic: amount, rate range, structure.
3. Your quote — rates, fees, and terms in writing, from the pricing you can verify yourself.
4. Appraisal and documents — the appraisal is usually the longest step.
5. Commitment and funding — completed through the lawyers; you get independent legal advice before signing anything.

Your Credit Score and Subprime Lending

Equifax and TransUnion scores don’t decide your approval here — equity does. What your score does affect is which tier of lender you can access, and therefore your rate: around 600+, B-lender options open up below private-lender pricing.

That makes credit repair part of your exit strategy: a year of clean payments on a subprime mortgage, plus paying down revolving balances, is often enough to refinance to a cheaper lender. Many borrowers also use the new mortgage for debt consolidation, clearing high-interest balances in the same step. We build that plan into the file — the goal is to get you out of subprime rates, not keep you in them. Start with our five simple steps to improving your credit score.

Frequently Asked Questions

What is a subprime mortgage?

A subprime mortgage — also written sub-prime, and now often called non-prime — is a home loan for borrowers who don’t meet the major banks’ credit or income requirements. In Ontario it is offered by B-lenders and private lenders, who approve based on home equity, typically up to 75% of the property’s value.

Do subprime mortgages still exist in Canada?

Yes. Canadian subprime lending is alive and growing — done by B-lenders and private lenders who qualify borrowers on home equity (up to 75% loan-to-value) rather than credit score. It is structured differently from the US loans behind the 2008 crisis.

What credit score do I need for a subprime mortgage?

There is no minimum. Private lenders approve based on equity, so scores below 600 — even below 500 — qualify routinely. Your score affects your rate tier, not your approval.

Is a subprime mortgage the same as a private mortgage?

In Ontario the terms are used almost interchangeably. Strictly, subprime covers both B-lenders (near-bank lenders with flexible criteria) and private lenders (individuals and companies lending on equity). We work with both.

What interest rate will I pay on a subprime mortgage?

Between 8% and 12% for private or subprime funds, set mainly by loan-to-value. Lender and broker fees are 2%–3% each. See our lending guidelines and pricing page for the current rate table.

How much do subprime mortgages cost in 2026?

Expect a rate between 8% and 12%, lender and broker fees of 2%–3% each (combined 4%–6%, $3,500 minimum), an appraisal at about $600 plus HST, a $375 application fee, and legal costs of roughly $1,500–$3,000. Every current figure is published on our lending guidelines and pricing page.

Can I get a subprime mortgage if I’m self-employed?

Yes — self-employed borrowers are one of the largest subprime groups. Equity-based approval means tax-optimized income is not the obstacle it is at a bank.

How fast can a subprime mortgage close?

Assessment is same-day. Funding speed depends mainly on the appraisal; urgent power-of-sale deadlines can often be accommodated — tell us the deadline up front.

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