Private Mortgage Lending, MICs & OSFI B-20 Rules in Canada (2026 Guide)
Canada has three mortgage lending tiers: FRFIs (banks), private lenders, and MICs — each with different rules, rates, and borrower requirements.
OSFI Guideline B-20 requires FRFIs to stress-test borrowers at the higher of 5.25% or contract rate plus 2%. Private lenders and MICs are exempt from this federal rule but are regulated provincially.
MICs (Mortgage Investment Corporations) are defined under Section 130.1 of the Income Tax Act. They pool investor funds to issue mortgages and can be held in RRSPs and TFSAs — making them both a borrowing source and an investment vehicle.
As of the 2024 federal Budget, first-time buyers purchasing newly built homes can access 30-year amortization on insured mortgages, reducing monthly payments compared to the standard 25-year maximum.
Private lenders typically charge 8–14% interest plus lender fees of 1–3%, versus bank rates of 5–6%. This higher cost reflects the greater flexibility and risk tolerance of non-regulated lenders.
Expert Research FAQ
How do FRFIs determine my eligibility for a mortgage?
They refer directly to the OSFI Guideline B-20 framework.
Your lender has a detailed plan for approving mortgages, based on how much risk they're willing to take.
The lender checks your identity, history, and how likely you are to repay the mortgage.
The lender carefully looks at whether you can comfortably afford your mortgage payments.
The lender assesses the value of the property you want to buy and how well it will be maintained.
The lender manages risks through things like mortgage insurance, to make sure your mortgage is secure.
What if I have a less-than-perfect credit score or unconventional income?
However, FRFIs apply stricter scrutiny, often requiring a Loan-to-Value (LTV) ratio of 65% or less. As the risk increases, the lending threshold decreases.
If you have a low credit score or can't easily prove your income, some lenders still offer mortgages.
You'll likely need a larger down payment; these mortgages often require you to borrow 65% or less of the home's value.
Lenders take extra precautions with riskier mortgages, like having senior staff review them and closely managing any defaults.
Lenders need to have enough money set aside to cover potential losses from riskier mortgages.
If you have trouble qualifying for a traditional mortgage, you'll generally need a down payment of at least 35%.
Here's a quick look at how much you might be able to borrow, depending on your situation:
How does OSFI ensure FRFIs follow these guidelines?
Enhanced transparency and detailed documentation enable OSFI to assess a FRFI's financial health and the risks linked to its mortgage practices.
The government watches banks and lenders to make sure they're financially stable and following the rules.
If a lender isn't managing mortgage risks well, the government can step in to fix the problem.
Lenders need to keep records of their mortgage policies and share them with regulators when asked.
Lenders must share details about their mortgages, like how many are insured, the payment schedules, and loan sizes.
If a lender doesn't follow the rules, they might face closer supervision or need to hold more money in reserve.
What are the rules around Home Equity Lines of Credit (HELOCs)?
A HELOC lets you borrow money against the equity in your home; this includes reverse mortgages.
Lenders need to manage the risks of HELOCs, and they expect you to eventually pay back the full amount you borrow.
You can generally only borrow up to 65% of your home's value with a HELOC.
If you need to borrow more than 65% of your home's value, that extra amount needs to be paid off with a regular mortgage payment schedule.
Your lender may re-evaluate your HELOC limit if your home's value drops significantly or your financial situation changes a lot.
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