How Your Credit Score Impacts Mortgage Rates and Approval

Jeff Johnson • August 26, 2026

What Lenders Mean by “Good Credit” When You Apply for a Mortgage

Credit is simply the ability to borrow money today based on the trust that you’ll repay it in the future. When you apply for a mortgage, lenders want proof that you’ve consistently honoured that trust by managing credit responsibly.

But what does a good credit history actually look like to a lender?

The 2 / 2 / 2 Rule Explained

If you’re newer to credit or want a simple way to remember minimum mortgage credit requirements, think of the 2 / 2 / 2 rule:

2 active trade lines
Established for at least 2 years
With a minimum combined limit of $2,000

This is a common baseline lenders use when assessing credit for mortgage financing.

What Counts as a Trade Line?

A trade line is any account where credit is extended to you, such as:

A credit card
A line of credit
A car loan
A personal or installment loan

Each trade line reports your payment history to the credit bureau and contributes to your credit score.

For a trade line to be considered active, it must:

Have been used at least once, and
Show activity at least once every three months

Why Time Matters

Lenders want to see that you’ve managed credit responsibly over time, not just recently. Using two trade lines consistently for at least two years helps demonstrate stable financial habits and reliability.

Understanding Credit Limits vs. Balances

The credit limit is what matters—not the balance.

For example:

A $1,000 credit card + a $2,500 line of credit = $3,500 total limit
This meets the minimum requirement

You do not need to carry a balance to build credit. In fact, the best approach is to:

Use your credit regularly
Pay it off in full each month (for credit cards)
Make all loan payments on time

If your lender offers a credit limit increase and you’re managing credit well, it’s often a good idea to accept it. Higher limits—used responsibly—can strengthen your credit profile.

A Simple Way to Build Credit Automatically

One effective strategy is to:

Put recurring bills on your credit card
Set up an automatic transfer to pay the balance in full every month

Automation helps build positive credit history without requiring constant attention—just be sure to monitor your accounts to ensure everything runs smoothly.

What About Credit Scores?

Yes, credit scores matter—but they’re not the whole story.

If you:

Have two active trade lines
Established for two years
With at least $2,000 in total limits
And no missed payments

…your credit score will generally take care of itself.

That said, it’s still wise to review your credit report occasionally to check for errors or unfamiliar accounts.

Final Thoughts

If you’re thinking about buying a home in the next couple of years, now is the perfect time to review your credit and make sure you’re on track. Small adjustments today can make a big difference when it’s time to apply for a mortgage.

If you’d like help reviewing your credit or understanding how it affects your mortgage options, feel free to connect anytime. I’d be happy to walk through it with you and help you plan with confidence.

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Jeff Johnson

Mortgage Expert

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How Property Type and Condition Influence Mortgage Financing

By Jeff Johnson • October 7, 2026

Why the Property Matters When You’re Qualifying for a Mortgage When qualifying for a mortgage, lenders typically look at four core areas: Income Credit Down payment or equity The property itself Most buyers focus heavily on income, credit, and savings—and for good reason. But even if those boxes are checked, the property can still determine whether a mortgage is approved. Why Lenders Care About the Property From a lender’s perspective, the property is the collateral for the mortgage. In the unlikely event of default, they need to know the home can be sold quickly and at fair market value to recover their funds. Because of this, lenders are careful about the condition, value, and marketability of any property they finance. Homes that are in poor repair, unconventional, or overpriced can raise red flags—even when the borrower is well qualified. Appraisals Are Always Part of the Process Every mortgage requires an appraisal to confirm value. Insured mortgages (through CMHC, Sagen, or Canada Guaranty) often use an automated valuation model completed online. Conventional mortgages typically require a full, on-site appraisal by a certified appraiser. This appraisal is not optional and happens after an offer is accepted—not at the pre-approval stage. Why Pre-Approvals Aren’t a Guarantee A pre-approval is a great first step, but it only assesses you, not the property. Once you’ve made an offer, the lender must approve the specific home you’re buying. Understanding this upfront helps avoid surprises and confusion later in the process. The Risk of Buying Without a Financing Condition In competitive markets, buyers sometimes remove financing conditions to strengthen their offer. However, this comes with risk. If the appraisal comes back low—or the lender is concerned about the property’s condition—you could be denied financing after the offer is firm. In that scenario, your deposit may be at risk. Buying a Home That Needs Work If you’re considering a property that isn’t in perfect condition, there are solutions. A purchase plus improvements program allows you to buy a home and include renovation costs in your mortgage. The process is structured and requires planning, but it can be an excellent way to turn a fixer-upper into a great long-term investment. Final Thoughts Mortgage approval isn’t based solely on your finances—the property matters just as much. Knowing this ahead of time helps you make smarter offers, reduce risk, and plan more effectively. If you’re buying a property that needs work or want clarity on how a lender may view a specific home, feel free to reach out. I’d be happy to walk you through your options and help you plan with confidence.

What You Need to Know About Mortgages and Parental Leave

By Jeff Johnson • September 30, 2026

If the title of this article caught your attention, chances are your family is growing. Congratulations. If you’re thinking now is the right time to move into a home that better fits your growing family—but you’re unsure how parental leave affects your ability to qualify for a mortgage—you’re in the right place. Here’s the good news. Qualifying for a mortgage while on parental leave is possible when it’s done correctly. When you work with an independent mortgage professional, lenders can often qualify you based on your return-to-work income , as long as you can provide documentation confirming you have guaranteed employment waiting for you. A word of caution If you walk into a bank branch and disclose that you’re currently on parental leave, there’s a chance the bank will only allow you to qualify using your parental leave income. That can significantly reduce your borrowing power. Parental leave income is typically limited to 55% of your previous earnings, up to a weekly maximum. Qualifying on that amount alone can restrict your options and impact the type of home you can purchase. Why lender choice matters One of the biggest advantages of working with an independent mortgage professional is choice . You’re not limited to one lender’s rules or products. Some lenders will allow you to qualify using 100% of your confirmed return-to-work income , which can make a meaningful difference in your approval amount and overall options. What you’ll need to qualify Most lenders will require an employment letter that includes: Employer name (preferably on company letterhead) Your job title Original start date (to confirm probation has been completed) Confirmed return-to-work date Guaranteed salary upon return Lenders want reassurance that your income will resume once parental leave ends. You may also be asked to provide income history from the past couple of years, which is standard for most mortgage applications. One important note Whether or not you actually return to work after parental leave is entirely your decision. From a mortgage perspective, qualification is based on having a confirmed position available to you at the time of approval. If you have questions about qualifying for a mortgage while on parental leave—or anything mortgage-related—please connect anytime. I’d be happy to walk you through your options and help you plan with confidence.