If you’ve ever wondered where you actually fit in the mortgage world—you’re not alone.
Most people think mortgages are black and white:
In reality, it’s not that simple. There’s a spectrum. A hierarchy.
Think of it more like a totem pole.
And understanding where you sit on that totem pole can make the difference between:
So before you stress about rates or approvals—let’s break this down properly.
There are five main levels of mortgage lending in Canada. Each tier is unique in the qualifications required for that type of mortgage, interest rates offered, and even if there is a fee, or no fee.
Each tier serves a purpose and each one has a place.
Here’s how it breaks down:
This is where everyone thinks they are—and where most lenders compete on rate alone.
This tier is considered the insured and insurable mortgage tier. Meaning, everyone has to qualify on a very strict set of guidelines set out by the three main default insurers in Canada – CMHC, Sagen (formerly Genworth formerly GE), and Canada Guaranty. There are no exceptions to the guidelines, no outside of the box lending.
Also, for this tier, only purchase transactions and straight switch transactions qualify. If you already own a house and want to borrow more money out of it, that would be considered a refinance transaction, and that falls under the tiers below.
Typical borrower profile:
If this is you, things are simple:
The rates offered by lenders here are the lowest you’ll see in the industry. If you qualify, then you can trust the rate is going to be very competitive.
What is B20 compliant? OSFI, the banking regulator in Canada, has set out general guidelines for banks to abide by when underwriting mortgages that are not insured or insurable (the top tier). These are the B20 guidelines.
Click the link for a very good video, straight from our friends at OSFI, explaining the B20 guidelines.
https://www.osfi-bsif.gc.ca/en/about-osfi/multimedia-library/guideline-b-20-explained
This tier is for all of those who don’t qualify on insured or insurable guidelines, but still qualify within a tighter set of guidelines for debt servicing and credit. For example – in the top tier, the maximum debt servicing ratios have to be 39/44 GDS/TDS, whereas in this tier, as long as the TDS is within 44%, it will still qualify under the B20 guidelines.
In the top tier, no refinance transactions are allowed. No equity take-outs, and no home equity line of credits. In this tier, as long as the borrower qualifies under the guideline, they can refinance their home to pull money out for their usage.
This is where things get interesting—and where many real-world borrowers fall. You see, the banks have a very small part of their lending portfolio that is considered “non-compliant”, meaning, it does not qualify under the B20 guidelines.
The banks don’t really advertise this level of mortgages, because the basket of funds they are pulling from, the non-compliant basket, is a much smaller basket than the insured and insurable basket, and the B20 compliant basket. While the banks are very willing to lend in the top two tiers, the banks get very choosy when considering borrowers for their non-compliant mortgages.
Basically, if you have good credit and a high net worth, but the mortgage just doesn’t qualify under the top two tiers, you’ll be considered for this basket of lending.
You might be here if:
This is the part of the totem pole that doesn’t get talked about enough. Most brokers may default harder to put together deals into the alternative lending realm (below), rather than figuring out how to make the borrower fit into this near prime box.
Most deals in this range don’t get declined—they get misunderstood.
Banks are built for clean, simple files. But real life isn’t always clean or simple.
And this is where:
This is also where we as mortgage brokers shine. Since 2009, David and team have been helping tons of Canadians fit into this tier. By strategizing the mortgage properly, by telling the right story, and by working with lenders and banks that can stretch the limits on their near-b files.
Further down the totem pole, you’ll find alternative (B) lenders. Here, borrowers just don’t fit in the top three levels, but still need to qualify for a mortgage.
Here, borrowers need a minimum of 20% down, and most lenders will charge a fee to do the lending.
This level is for borrowers who:
These mortgages typically come with:
But here’s the important part: This is not a failure—it’s a strategy.
Used properly, alternative lending is:
At the bottom of the totem pole is private lending.
This is typically used when:
Private lending is:
And it should almost always be:
Short-term and intentional
Not a long-term solution—but a tool when needed.
Here’s the part most people miss:
Where you sit on the totem pole isn’t the problem.
The real issue is how your deal is structured.
We’ve seen it many times:
If your income isn’t simple, your mortgage strategy shouldn’t be either.
If you’re not sure where you fall on the totem pole—that’s normal.
Most people aren’t.
But if any of this sounds like you:
Then you’re exactly the type of client that benefits from the right approach.
Not a different mortgage. Not a riskier lender. Just the right structure.