A Lender vs B Lender Mortgages: What’s the Difference and Which One Is Right for You?

Not every mortgage in Canada comes from a big bank — and that’s not necessarily a bad thing. In fact, Canada’s lending system is built to offer options for all types of borrowers. Whether you’re salaried with great credit or self-employed with a few dings on your credit report, there’s likely a lender out there for you.
In this guide, we break down the difference between A lenders and B lenders in Canada, who they’re for, and how to decide which one fits your mortgage goals.

What Is an A Lender?

A lenders are the major players in Canada’s mortgage world. These are federally regulated banks and provincially regulated credit unions that follow strict lending guidelines. To qualify, borrowers typically need to check off all the boxes — solid credit history, stable income, low debt levels, and a standard down payment.
Because of the lower risk involved, A lenders offer the most competitive interest rates. However, they also have the strictest approval criteria. You’ll need to pass the mortgage stress test, which means qualifying at a rate higher than what you’ll actually pay.

Examples of A Lenders in Canada:

• RBC
• TD
• Scotiabank
• BMO
• CIBC
• National Bank
• Desjardins

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What Is a B Lender?

B lenders — sometimes called “alternative lenders” — serve Canadians who don’t quite qualify for traditional bank mortgages. This might be due to credit issues, inconsistent or self-employed income, or a higher debt load. B lenders are more flexible, but they come with slightly higher interest rates to offset the increased risk.

You’ll often hear about mortgage investment corporations (MICs) or specialized divisions of big lenders that offer B lending solutions. These lenders often don’t require borrowers to pass the stress test, but they do require a higher down payment — usually at least 20%.

Examples of B Lenders in Canada:

• Home Trust
• Equitable Bank (B)
• MCAP Eclipse
• Merix Lendwise
• XMC Mortgage
• Optimum Mortgage

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Key Differences Between A and B Lenders

Feature	A Lenders	B Lenders
Credit Score Required	650+	500+
Minimum Down Payment	5%	20%
Interest Rates	Lower	Higher
Income Type Accepted	Stable, T4	Variable, self-employed
Stress Test Required	Yes	Often not required
Amortization	Max 30 years	Up to 40 years possible

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When Should You Choose an A Lender?

If your financial profile checks all the boxes — good credit, low debt, verifiable employment income, and a decent down payment — you should absolutely explore mortgage options with A lenders. Not only will you get the best possible rates, but your mortgage will also likely come with more favourable terms, like flexible prepayment options and lower fees.
Salaried employees or newcomers with a solid Canadian credit history will usually start with A lender applications.

When Is a B Lender the Better Fit?

If your income is non-traditional — say, you’re self-employed, paid in cash, or working contract gigs — or your credit history has a few blemishes, a B lender can be a solid solution. B lenders are especially useful for:

• Newcomers to Canada with limited credit history
• Self-employed individuals who prefer to retain income in their corporation
• Borrowers with bruised or recovering credit
• Homeowners with high equity but low reportable income

Yes, you’ll likely pay more in interest — but you’ll get approved when an A lender might have said no. And often, B lending is just a temporary solution until your finances are in better shape.

How Risk Tolerance Plays a Role

Choosing between an A lender and B lender isn’t just about qualifying — it’s also about comfort. A lenders give you peace of mind with lower rates and predictable payments. B lenders give you flexibility when you need it most, but it’s important to have an exit plan.
If you’re choosing a B lender due to credit or income issues, work with a mortgage broker to build a path back to A lending in the future. This could mean refinancing or renewing after a couple of years once your situation improves.

Frequently Asked Questions

Do B lenders charge extra fees?
Yes, in some cases you may pay lender or broker fees with B lenders that aren’t common with A lenders. These help offset the higher risk.

Can I switch from a B lender to an A lender later?
Absolutely. Many borrowers use B lenders as a stepping stone. With improved credit and income, you can refinance with an A lender when your term is up.

Do I always need 20% down with a B lender?
Yes. Since B lenders don’t offer CMHC-insured mortgages, they require at least 20% down. Some may ask for more depending on your credit profile.

Final Thoughts

There’s no one-size-fits-all when it comes to mortgages. A lenders offer lower rates and stricter requirements. B lenders offer flexibility and second chances — at a slightly higher cost. The right choice depends on your income, credit, goals, and how much risk you’re comfortable taking.

Still unsure which route to take?
Chat with a mortgage advisor who can help assess your full financial picture and match you with the best-fit lender.

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