# How does OSFI's Guideline B-20 affect refinancing?

> OSFI's Guideline B-20 establishes the benchmark for residential mortgage underwriting practices that federally regulated financial institutions (FRFIs) must adhere to.

Category: Refinance
Last verified: 2026-02-18
Source: https://ratellow.com/faqs/refinance/how-does-osfis-guideline-b-20-affect-refinancing

## Answer
B-20 outlines five core principles for underwriting:

1. **Governance:**
Establishes FRFI governance and the development of overarching business objectives, strategy, and oversight mechanisms.
2. **The borrower's identity:**
Emphasizes FRFI assessment of the borrower's identity, background, and demonstrated willingness to service their debt obligations on a timely basis.
3. **Borrower's Capacity:**
Stresses FRFI assessment of the borrower's capacity to service their debt obligations on a timely basis
4. **Collateral:**
Focuses on FRFI assessment of the underlying property value/collateral and management process.
5. **Effective credit and counterparty risk management practices:**
Requires FRFIs to have effective credit and counterparty risk management practices and procedures that support residential mortgage underwriting and loan asset portfolio management, including mortgage insurance where appropriate.

## Institutional highlights
- Lenders must follow careful lending practices when approving your mortgage.
- Your ability to repay your mortgage is the most important factor for approval.
- Lenders can't rely on mortgage insurance instead of carefully assessing your finances.
- Lenders must share enough information about their mortgages so people can understand them.
- There are specific rules for home equity lines of credit (HELOCs) to protect you and the lender.

## Related guide
- https://ratellow.com/guides/refinance-break-even

## Sources
- Debt service coverage — https://www.osfi-bsif.gc.ca/en/guidance/guidance-library/residential-mortgage-underwriting-practices-procedures-guideline-2017#2.3.3
- LTV Ratio Frameworks — https://www.osfi-bsif.gc.ca/en/guidance/guidance-library/residential-mortgage-underwriting-practices-procedures-guideline-2017#2.4.3
- OSFI exempts uninsured mortgage straight switches from the prescribed MQR and implements portfolio LTI limits — https://www.osfi-bsif.gc.ca/en/guidance/guidance-library/osfi-exempts-uninsured-mortgage-straight-switches-prescribed-mqr-implements-portfolio-lti-limits