Canadian mortgage lenders sit on a spectrum. At one end are the banks, credit unions and mortgage-only lenders that offer the lowest rates and apply the strictest rules; at the other are private lenders that lend mainly on the equity in a property, for short terms and at the highest cost. Where a borrower lands depends on credit, documented income, debts and the property, and that position sets the rate, fees and terms on offer. This overview explains each tier in a few lines and points to the page that covers it in depth; the lenders and brokers guide collects the rest.
The lender tiers at a glance
| Tier | Who lends | Typical borrower | Cost compared with a bank |
|---|---|---|---|
| A-lender | Big banks, other banks, monoline lenders, most credit unions | Good credit, fully documented income, standard property | The benchmark: lowest rates, usually no lender fee |
| B-lender | Trust companies and smaller banks that specialise in alternative lending | Bruised credit, hard-to-document income, high debt ratios | Higher rate, often a lender fee |
| Mortgage investment entity (including MICs) | Pooled investor funds | Short-term or non-standard loans that banks and B-lenders won’t make | Higher again, with lender and broker fees |
| Private lender | Individuals and private lending companies | Turned down elsewhere, or needs money fast; approval rests mainly on equity | Highest rates and fees, short terms |
Rates move with the market and differ by borrower, so they aren’t listed here. The current mortgage rates page shows the bank benchmark; each tier below it prices above that.
A-lenders
A-lenders are the mainstream: the big banks, smaller banks such as National Bank and Tangerine (owned by Scotiabank), monoline lenders, and most credit unions. They lend to borrowers with good credit and income they can document with pay stubs, T4s or notices of assessment, on standard residential properties.
What they check is largely set by federal rules. The stress test applies to every federally regulated lender:
Lenders check that you could afford the payments at the greater of your contract rate plus 2% or 5.25%, a floor set by OSFI for uninsured mortgages and by the federal government's mortgage insurance rules (the Minister of Finance's Eligible Mortgage Loan Regulations) for insured ones.For an insured mortgage (less than 20% down), the insurer’s limits apply as well: the GDS and TDS ratios and a credit score requirement.
For a CMHC-insured purchase, at least one borrower or guarantor needs a credit score of 600 or more; CMHC may use other ways to judge creditworthiness for a borrower with no credit history.Lenders set their own score cut-offs above that, which the guide to the credit score needed for a mortgage compares. Our roundup of the best mortgage lenders in Canada covers the individual banks, monolines and credit unions, with their prepayment privileges and products.
Monoline lenders
A monoline lender does only mortgages. CMHC describes these mortgage finance companies as non-bank lenders that “only offer mortgage loan products (that is, they are non-depository) and are usually only accessible via brokerages.” With no branches or deposit business, they compete mainly on rate and terms. The comparison of a big bank vs a monoline lender lists the main monolines and how their penalties and privileges differ from a bank’s.
Credit unions
Credit unions are member-owned co-operatives. Most are regulated by their province and covered by provincial deposit insurance; a few, such as Coast Capital Savings Federal Credit Union, are federal credit unions and CDIC members. The federal stress test binds federally regulated lenders on uninsured mortgages:
It applies to uninsured mortgages (20% or more down) at federally regulated lenders, under OSFI Guideline B-20.A provincially regulated credit union follows its provincial regulator’s rules on an uninsured mortgage, which can differ, while insured mortgages are qualified the same way everywhere:
Insured mortgages (under 20% down) are qualified at the same rate under the federal mortgage insurance rules, the Eligible Mortgage Loan Regulations made by the Minister of Finance.Credit unions usually lend only in their own province or region and some offer products the big banks don’t. Individual credit unions are profiled in the lender roundup.
B-lenders
B-lenders (alternative lenders) are mostly trust companies and smaller banks that lend to borrowers a major bank declines: a damaged credit history, a recent bankruptcy or consumer proposal, income that is hard to prove, or debt ratios above a bank’s limits. Most deal only through mortgage brokers, charge more than a bank and often add a lender fee, and borrowers commonly plan to return to an A-lender after a term or two. What a B-lender is and how its costs work is explained in the guide to B-lender mortgages; the named lenders and their programs are compared in the B-lender roundup.
Situations that often lead to a B-lender each have their own guide: self-employed mortgages, stated-income programs, mortgages for newcomers, and the lenders for bad credit by score band.
Mortgage investment corporations (MICs)
CMHC groups MICs with other private funds as mortgage investment entities: non-bank lenders that provide “short-term loans with higher interest rates to borrowers who don’t qualify with traditional lenders.” A MIC pools money from investors and lends it out, often for bridge loans, construction, land or quick closings. How a MIC is structured and taxed, and what it means for investors, is covered in the guide to mortgage investment corporations; the named MICs that lend to homeowners are in the roundup of private mortgage lenders.
Private lenders
Private lenders are individuals or private companies lending their own or pooled money. They decide mainly on the property’s value and the borrower’s equity, approve quickly, and lend for short terms (often a year, frequently interest-only) at the highest rates and fees in the market. They aren’t federally regulated lenders, so the federal stress test doesn’t bind them, and a private mortgage is normally used as a bridge with a planned exit: a refinance with a B-lender or bank, or a sale. Costs, red flags and exit plans are in the guide to private mortgage lenders, and financing raw land, which banks often avoid, is covered in mortgages for vacant land.
Which type of lender fits which situation
| Situation | Lender type usually used | Where to read more |
|---|---|---|
| Good credit, stable documented income, standard home | A-lender: bank, monoline or credit union | Best mortgage lenders in Canada |
| Wants mortgage, chequing and investments in one place | Big bank | Big bank vs monoline |
| Lowest rate through a broker, no need for a branch | Monoline | Big bank vs monoline |
| Self-employed with low reported income | A-lender with full returns, or a B-lender | Self-employed mortgages |
| Credit problems or a recent insolvency | B-lender, or private if recent | Lenders for bad credit |
| Bridge, construction or land financing | MIC or private lender, some credit unions | Private mortgage lenders |
| Urgent need with strong equity (tax arrears, a fast close) | Private lender | Private mortgage lenders |
A mortgage broker can place a file at lenders across these tiers, while a bank’s own staff offer only that bank’s products; the trade-offs between applying through a broker, a bank or an online platform are compared in the digital mortgage comparison. Borrowers who are close to the next tier up can look at ways of qualifying for a larger mortgage, or at what lenders read in bank statements and spending history.
Related pages
Sources
The figures and rules on this page come from these sources, last checked against them on September 29, 2026. How we check facts.