Buying your first home in Calgary is an exciting goal—but if you’ve had to file a consumer proposal to deal with debt, you might be wondering if homeownership is still within reach. The short answer is: yes, it’s possible, but it’s not easy.
A consumer proposal is a legal process where you work with a Licensed Insolvency Trustee (LIT) to repay a portion of your unsecured debts. Many Canadians choose this route to avoid bankruptcy and get a fresh start. But lenders see it as a major red flag, which can make qualifying for a mortgage more complicated.
So, what does this mean if you’re hoping to buy a home in Calgary while you’re still in (or recently finished) a consumer proposal?
Qualifying for a Mortgage During a Consumer Proposal
It’s technically possible to get approved for a mortgage while you’re still in a consumer proposal, but it’s rare.
- Big banks usually won’t lend until at least two years after your proposal is completed and discharged.
- Private lenders may be an option since they have more flexible criteria, but they charge higher interest rates and fees.
If you’re still in a consumer proposal, most first-time buyers in Calgary find it easier to wait until it’s discharged and then spend some time rebuilding their credit before applying.
Should You Wait Before Applying for a Mortgage?
In most cases, yes. Waiting gives you time to:
- Rebuild your credit by using secured or regular credit cards responsibly.
- Save for a larger down payment (20% or more makes you more attractive to lenders).
- Show lenders you’ve regained financial stability with a steady job and consistent bill payments.
The reality is that private lending can be very expensive. By waiting, you increase your chances of qualifying with a traditional lender at a lower interest rate—saving you thousands over the life of your mortgage.
Tips to Improve Your Chances of Mortgage Approval
If you’re determined to move forward sooner, here are steps you can take:
- Work with a mortgage broker in Calgary who understands the local market and has connections with both traditional and private lenders.
- Save as much as possible for a down payment. A bigger down payment means less risk for the lender.
- Have your documents ready (proof of income, employment letters, bank statements, credit reports). Lenders want to see progress on your financial recovery.
- Consider a co-signer. A trusted family member with good credit can improve your odds.
- Pay off your consumer proposal as quickly as possible. The sooner it’s discharged, the sooner you can start rebuilding.
What About Mortgage Renewals and Refinancing?
If you already own a home in Calgary and are making mortgage payments on time, filing a consumer proposal won’t automatically cancel your mortgage.
- Renewals: Most lenders will allow you to renew as long as you’ve kept up with payments, though you may face higher rates.
- Refinancing: This is possible but difficult during a consumer proposal. If approved, lenders will likely require that you use some of the equity to pay off the proposal.
How Long Will a Consumer Proposal Stay on Your Credit Report?
- Equifax: Three years after completion or six years from the date of filing, whichever comes first.
- TransUnion: Three years after completion or six years from the date of default, whichever comes first.
Once it drops off, your credit report should reflect a clean slate. If outdated notes still appear, it’s important to dispute them before applying for a mortgage.
Next Steps for Calgary First-Time Buyers
Yes, you can technically get a mortgage while in a consumer proposal—but in most cases, waiting until it’s completed and rebuilding your credit is the smarter move.
If you’re serious about buying your first home in Calgary, talk to me, your local mortgage broker. They can help you:
- Review your credit situation.
- Decide whether to wait or explore private lenders.
- Create a realistic plan to move from consumer proposal to homeownership.
With patience and the right guidance, that Calgary home you’ve been dreaming about can still be yours.
