Can I Get A Mortgage With A Consumer Proposal?

• What is a Consumer Proposal in Canada?
• Why do lenders care about a Consumer Proposal?
• How does a Consumer Proposal affect a mortgage?
• Can a Consumer Proposal affect renewing your mortgage?
• So, can I get a mortgage while in a Consumer Proposal?
• Why does mortgage insurance matter in a Consumer Proposal?
• What are some Consumer Proposal trends?
• How does mortgage approval work during and after a Consumer Proposal?
• Can I get a mortgage after completing a Consumer Proposal?
• When does a Consumer Proposal drop off your credit report?
• How to get a mortgage sooner after a Consumer Proposal

What is a Consumer Proposal in Canada?

A Consumer Proposal in Canada is a legally binding agreement filed under the Bankruptcy and Insolvency Act that allows you to settle unsecured debts through one affordable monthly payment over a set period (often up to five years), instead of trying to keep up with multiple creditors.

Only a Licensed Insolvency Trustee (LIT) can file and administer a Consumer Proposal in Canada, under the supervision of the Office of the Superintendent of Bankruptcy (OSB).

Watch our short video below to see what’s involved:

When it comes to Consumer Proposals, one important thing to note is:

• A mortgage is a secured debt
• A consumer proposal typically addresses unsecured debt (e.g., credit cards, personal loans, payday loans, CRA unsecured tax debt)

This means your existing mortgage is not automatically rewritten, reduced, or eliminated through a Consumer Proposal. If you continue making your mortgage payments, you usually keep your home.

From a lender’s perspective, however, a Consumer Proposal is recorded on your credit report and often associated with an R7 credit rating. That’s where the friction begins.

Why do lenders care about a Consumer Proposal?

Lenders care about Consumer Proposals because it implies risks. They signal that:

• You were unable to meet your debt obligations
• Creditors accepted reduced repayment
• Your credit profile experienced significant stress

For a prime lender—such as a bank or credit union—this is a major underwriting event. For an alternative lender—like P2P platforms—it is a risk factor that can sometimes be canceled out by equity, down payment size, and a strong income.

This is why the question is not just:

“Can I get a mortgage while in a consumer proposal?”

but:

“Which lender would consider me, at what rate, and under what conditions?”

How does a Consumer Proposal affect a mortgage?

If you already have a mortgage and you continue making Consumer Proposals payments on time, most lenders will not immediately interfere. 

Important distinctions include:

• Your home is secured against the mortgage
• As long as payments are current, the lender’s collateral is not under threat
• The proposal does not usually modify secured lending terms

However, if you fall behind on your mortgage while in a Consumer Proposal, the situation escalates quickly. Secured lenders retain their enforcement rights.

So in simple terms:

• On-time mortgage payments + active consumer proposal = Usually stable
• Missed mortgage payments + active consumer proposal = High risk

Can a Consumer Proposal affect renewing your mortgage?

This is where people get caught off guard. When your mortgage term ends, you face:

• A simple renewal with your current lender
• Or switching lenders for a better rate

If you renew with the same lender and your payment history has been clean, approval may be smoother because they already hold the security. If you try to switch to a new prime lender during an active consumer proposal, you are effectively applying for new credit. That often triggers stricter underwriting scrutiny.

So if you are asking:

“Will a consumer proposal affect my mortgage renewal?”

The honest answer is:
It depends on whether you stay with your current lender and how strong your file looks.

Can a Consumer Proposal affect refinancing your mortgage?

A Consumer Proposal can make refinancing your mortgage more difficult. Refinancing is not passive. It is a new credit decision. When you refinance, you are asking a lender to:

• Increase your mortgage balance
• Release equity
• Potentially consolidate debt

Alternative or private mortgage lenders may consider it, especially where there is:

• Significant home equity
• A strong loan-to-value (LTV) ratio
• Stable income
• A clear exit strategy

But it often comes with:

• Higher interest rates
• Lender fees
• Shorter terms

This is where “mortgage while in a consumer proposal” becomes a math problem, not a moral one.

So, can I get a mortgage while in a Consumer Proposal?

Yes, you can sometimes get a mortgage during a consumer proposal. But it depends almost entirely on lender category.

Mortgaging with prime lenders while in a Consumer Proposal

Prime lenders focus heavily on:

• Clean credit history
• Strong debt service ratios
• Minimal recent insolvency events

An active Consumer Proposal is usually a barrier. Some may consider applications after completion and seasoning (a period of clean credit rebuilding), but during the Proposal, prime approval is uncommon.

That does not mean impossible in every scenario, but it is rarely straightforward.

Mortgaging with alternative lenders during a Consumer Proposal

Alternative lenders operate with more flexibility.

They often consider:

• 20%+ down payment
• Strong income documentation
• Acceptable debt service ratios
• Evidence of financial stability post-filing

You may hear repeated advice that a 20 percent down payment is needed. That’s because:

• It creates an uninsured mortgage
• It reduces reliance on mortgage default insurance
• It lowers the lender’s exposure

Rates are typically higher than prime rates, but approval may be realistic under the right structure.

Mortgaging with private lenders while in a Consumer Proposal

Private lenders are asset-driven.They focus primarily on:

• Equity in the property
• Property value
• Exit strategy

They are less focused on credit score, but are also significantly more expensive. Private mortgages are often short-term solutions, not long-term homes for your financing.

Used strategically, they can bridge you from active Consumer Proposal to post-completion refinance with a stronger lender. Used poorly, they become a high-cost trap.

What is the 20% downpayment theme

If you are researching “Can I get a mortgage while in a Consumer Proposal”, you will often see 20% mentioned. That’s not random.

A 20 percent down payment:

• Removes the need for high-ratio mortgage insurance
• Reduces lender risk
• Signals financial recovery

In many active Consumer Proposal cases, this threshold is the difference between “no” and “maybe”.

Why does mortgage insurance matter in a Consumer Proposal?

If your downpayment is under 20%, your mortgage may require default mortgage insurance. When you are in a Consumer Proposal:

• Insurers apply strict eligibility criteria
• Lenders rely heavily on insurer approval
• The combined scrutiny increases

This is why high-ratio mortgage approvals during an active Consumer Proposal are significantly more challenging. In practice, many borrowers either:

• Wait until their proposal is completed
• Or increase their down payment to avoid the insurance dependency

Consumer Proposal Trends: Why Lenders Are Not Surprised?

Our first-party data shows that Consumer Proposals represent the dominant share of formal insolvency proceedings compared to bankruptcies.

That means:

• Underwriting departments have defined policies
• Risk tiers are already priced in
• This scenario is familiar

So while a Consumer Proposal affects your mortgage options, it does not automatically disqualify you from ever owning property. It shifts you into a different lane of lending.

How does mortgage approval work during and after a Consumer Proposal?

Getting a mortgage approval during or a Consumer Proposal is possible in some cases, but heavily dependent on lender type, down payment, and risk profile.

Let’s take a look at: 

• What happens after completion?
• What lenders actually look for
• How to improve approval odds
• Where people usually go wrong

This is where “mortgage after Consumer Proposal” becomes a timeline and preparation exercise rather than a yes-or-no question.

Can I get a mortgage after completing a Consumer Proposal?

You can get a mortgage after a completing a Consumer Proposal as you are no longer in an active insolvency proceeding. That changes how lenders assess risk.

How long after a Consumer Proposal can I get a mortgage?

There is no single rule for how long after a Consumer Proposal you can get a mortgage. However, patterns across underwriting policies typically include:

• Waiting until the proposal is fully completed
• Demonstrating re-established credit
• Showing 12 to 24 months of clean payment history
• Maintaining stable employment and income

For prime lenders, a seasoning period is often required. For alternative lenders, approval may be possible sooner, especially with a strong down payment. The longer the time since completion, the stronger your mortgage approval chances generally become.

When does a Consumer Proposal drop off your credit report?

A Consumer Proposal drops off your credit report some time after completion. While the exact duration depends on reporting agency rules, it does not stay forever. Lenders care less about the historical event itself and more about:

• What you did after it
• Whether new tradelines show perfect repayment
• Whether debt service ratios are manageable

The key concept here is credit rehabilitation. Time plus clean behaviour equals lower perceived risk.

How to get a mortgage sooner after a Consumer Proposal

You can get a mortgage sooner after your Consumer Proposal is done. Some borrowers do not want to wait years. In those cases, the pathway often involves:

• A 20 percent or larger down payment
• Alternative or B lender mortgage
• Higher interest rates initially
• A planned refinance into a prime lender later

This is where “exit strategy refinance” becomes critical. If you go this route, you must understand:

• The interest cost
• Lender fees
• Renewal timelines
• When you realistically qualify for a better rate

Used strategically, it accelerates homeownership. Used impulsively, it locks you into expensive borrowing.

What do lenders look for if you want a mortgage during or after a Consumer Proposal?

From down payment to affordability, lenders look at a few major factors when approving your mortgage after a Consumer Proposal: 

What size down payment can you provide?

Down payment strength is one of the biggest compensating factors. In many Consumer Proposal mortgage scenarios, lenders expect:

• 20 percent down payment or more
• Verified source of funds
• Documented savings history

Because higher equity lowers the loan-to-value ratio (LTV) and reduces lender exposure.

Do you pass affordability standards?

Even if you have completed your proposal, you still need to qualify under affordability standards. Lenders assess:

• Gross Debt Service (GDS) ratio
• Total Debt Service (TDS) ratio
• Stress test qualification

If your housing costs plus other obligations exceed policy limits, approval becomes difficult regardless of your insolvency history. A Consumer Proposal does not remove the math from the equation.

Do you have stable income and employment?
Lenders want predictability. They prefer:

• Full-time salaried employment
• Consistent self-employed income history
• Clean documentation (T4s, NOAs, pay stubs)

If you combine unstable income with a recent insolvency event, risk compounds quickly.

Have you re-established your credit?
This is non-negotiable for prime lenders. After a Consumer Proposal, rebuilding credit usually involves:

• One or two small tradelines
• Low credit utilisation
• Zero missed payments
• No new collections

Over time, this strengthens your mortgage application file.
Step-by-step: How to improve your mortgage approval chances during a Consumer ProposalIf you are serious about getting a mortgage while in a Consumer Proposal, or soon after completing one, here’s what you can do—step by step. 

Step 1: Stabilise the Consumer Proposal first

Before thinking about buying property:

• Make every proposal payment on time
• Avoid new unsecured debt
• Maintain predictable monthly budgeting

In our first-party data, Consumer Proposals represent the majority of formal insolvency filings. That volume means lenders are experienced at spotting unstable financial behaviour. Consistency is your strongest signal.

Step 2: Rebuild credit methodically

Do not open five accounts hoping for a miracle.

Instead:

• Open one secured credit card
• Keep utilisation below 30 percent
• Pay in full every month
• Allow time to pass

Credit rebuilding is about pattern formation, not speed.

Step 3: Increase your down payment

If you are asking, “Can I get a mortgage during a consumer proposal?”, the most practical lever is equity.

A larger down payment:

• Reduces risk
• Improves approval probability
• Signals financial discipline
• May reduce your interest rate tier

Step 4: Work with a licensed professional 

Not every mortgage broker has access to alternative lenders experienced in insolvency files.

You may need:

• A broker familiar with B lenders and private lenders
• A clear explanation from your Licensed Insolvency Trustee regarding your proposal status
• A documented timeline for completion

A well-structured file can mean the difference between rejection and conditional approval.

What are some common scenarios to consider?

Here are some real-world situations that you may find yourself in that may be affected by being in a Consumer Proposal. 

• Buying a house while in a Consumer Proposal
  You’ll often need a 20% down payment, you’ll likely be looking at an alternative lender, the interest rate is typically higher, and many buyers plan to refinance later once their credit profile improves. With prime lenders, approvals during an active Consumer Proposal are uncommon.
  
• Renewing a mortgage while in a Consumer Proposal
  If you stay with your current lender and have a clean payment history, renewal may be relatively smooth. Switching lenders mid-proposal is usually harder.
• Refinancing or taking a second mortgage during a Consumer Proposal
  Second mortgages are even more expensive and should be approached cautiously. Refinancing during an active proposal is typically equity-driven and rate-sensitive—not to mention highly scrutinised. 

What are some common risks, mistakes, and red flags?

Here are some things to avoid when it comes to mortgages while in a Consumer Proposal: 

• Assuming approval is automatic after completion

• Ignoring affordability ratios

• Taking high-cost private financing without an exit strategy

• Applying with multiple lenders simultaneously and damaging credit further

A Consumer Proposal is a financial reset tool. Turning it into a springboard for new unsustainable debt defeats the purpose.

Can I get a mortgage while in a Consumer Proposal?

Can you buy a house while in a consumer proposal in Canada?
Yes, it’s possible to buy a house in Canada while you’re in a Consumer Proposal, but most buyers use alternative (B-lender) or private lenders rather than prime banks. You’ll typically need a larger down payment (often 20% or more), stable income, and a clean recent payment history to be considered.

Will a Consumer Proposal affect my mortgage renewal?

A Consumer Proposal can affect your mortgage renewal. If you’re renewing with your current lender and you’ve kept mortgage payments up to date, it is often more straightforward than switching lenders during an active Consumer Proposal. If you need to change lenders at renewal, expect tighter approval rules, more documentation, and potentially higher rates.

How long after a consumer proposal can I get a mortgage?
The time it takes to get a mortgage after a Consumer Proposal depends on the lender. Many prime lenders prefer the Proposal to be completed and for you to show a period of re-established credit afterwards. Alternative lenders may consider you sooner, especially if you have a strong down payment, stable employment, and improving credit behaviour since filing.

Can I refinance my mortgage while in a consumer proposal?

Refinancing during a Consumer Proposal is more likely if you have significant equity and strong affordability. However, it can involve higher interest rates, stricter underwriting, and fewer lender choices than a standard refinance.

Do I need 20 percent down to get a mortgage after a consumer proposal?

You don’t need it, but having 20% down often improves your approval chances and can make the application process simpler. With a smaller down payment, you may face additional restrictions, fewer lender options, and stricter qualification requirements.

Take the next step with a Licensed Insolvency Trustee

A mortgage while you’re in a Consumer Proposal can be realistic—but only with the right expectations and the right plan. At Harris & Partners, our Licensed Insolvency Trustees will review your situation, explain what lenders are likely to accept right now, and help you understand what you can do next to move forward with confidence. 

Book your free consultation now or call us on 800–268–8093 for a private, no-pressure conversation focused on what you can realistically manage, and the quickest, cleanest route to homeownership.