# What are the critical mortgage underwriting principles for FRFIs?

> Guideline B-20 underscores five key principles for robust residential mortgage underwriting, steering FRFIs toward judicious lending decisions and effective risk management.

Category: Investor
Last verified: 2026-02-18
Source: https://ratellow.com/faqs/investor/what-are-the-critical-mortgage-underwriting-principles-for-frfis

## Answer
These principles ensures that lenders make informed and responsible decisions:

| Principle | Description |
|---|---| 
| Governance & Oversight | FRFIs must maintain strong governance and oversight frameworks for residential mortgage underwriting. | 
| Borrower Assessment | Lenders will verify your identity, assess your financial history, and evaluate your willingness to fulfill your debt obligations promptly. | 
| Capacity Assessment | Lenders will meticulously assess your ability to consistently meet your debt repayment obligations. | 
| Property Valuation | The value and management process of the underlying property are meticulously reviewed. | 
| Risk Management | Mortgage underwriting is fortified by robust credit and counterparty risk management practices, including insurance coverage.

## Institutional highlights
- Lenders look at your whole financial picture when you apply for a mortgage.
- Your ability to manage and pay off debt is the most important thing to lenders.
- Lenders won't rely too much on the value of the property alone, as selling a property to recover funds can be difficult.
- Lenders have a detailed set of rules they follow when deciding whether to give you a mortgage.
- Lenders regularly review their mortgage rules to make sure they're still comfortable with the level of risk.

## Related guide
- https://ratellow.com/guides/brrrr-mortgage-financing

## Sources
- I. Purpose and scope of the guideline — https://www.osfi-bsif.gc.ca/en/guidance/guidance-library/residential-mortgage-underwriting-practices-procedures-guideline-2017#1.0
- IV. Other guidance — https://www.osfi-bsif.gc.ca/en/guidance/guidance-library/residential-mortgage-underwriting-practices-procedures-guideline-2017#4.0
- Mortgage insurance — https://www.osfi-bsif.gc.ca/en/guidance/guidance-library/residential-mortgage-underwriting-practices-procedures-guideline-2017#2.5.1