Key takeaways
- →A lenders are federally regulated institutions bound by OSFI's Guideline B-20, including its minimum qualifying rate; B and private lenders sit outside that direct federal underwriting framework.
- →Ontario's regulator groups banks, credit unions, insurance companies, trust companies, and monolines together as “Traditional Lenders,” distinct from “Private Mortgage Lenders” — individuals, corporations, and investment firms.
- →Private lenders still hold a meaningful share of the market — 15.8% of Ontario mortgages by number in 2024, per FSRA — even as that share has been declining slightly year over year.
- →In Ontario, arranging a deal with a private individual, MIC, or syndicate requires a Level 2 agent licence; Level 1 agents can only deal with financial institutions and lenders approved under the National Housing Act.
A file that gets declined by a bank doesn't just disappear — it moves down a spectrum most clients have never heard of, from A lenders to B lenders to private lenders, each with a different risk appetite, a different cost of capital, and a different regulatory footing.
Here's what actually defines each tier, why a file moves down it, what it typically costs to do so, and the licensing layer that determines which broker or agent can even arrange the deal.
01 · What actually defines an A lender, a B lender, and a private lender?
A lenders are federally regulated institutions — banks and monoline lenders — bound by OSFI's Guideline B-20, including the minimum qualifying rate, and generally lending to prime-credit borrowers with verifiable income.
B lenders sit outside that direct federal underwriting framework: alternative and trust-company lenders that apply more flexible income and credit criteria at a higher rate, for files that don't fit an A lender's box but aren't high enough risk to require private funding.
Private lenders sit a step further out. Ontario's regulator, FSRA, groups banks, credit unions, insurance companies, trust companies, and monolines together as “Traditional Lenders,” and separately classifies individuals, corporations, and investment firms (including mortgage investment corporations and entities) as “Private Mortgage Lenders” — a formal regulatory line, not just industry shorthand.
02 · Why does a file move down the spectrum from A to B to private?
The most common reasons: self-employed income that doesn't fit standard verification — see our guide on self-employed mortgage underwriting — a past credit event still within a lender's look-back window, an unconventional property, or a need for speed and short-term bridge financing that an A lender's timeline can't accommodate.
None of these automatically mean a bad file — they mean a file that needs a lender whose underwriting criteria actually fit the situation, which is the core value a broker adds by working across the spectrum rather than one institution.
03 · How does cost and market scale actually differ across the three tiers?
| Tier | Typical rate positioning | Typical structure |
|---|---|---|
| A lender | Lowest, prime-priced | Fully amortizing, standard term, MQR-qualified |
| B lender | Moderate premium over A | Often shorter terms, more flexible ratios, still amortizing |
| Private lender | Highest, commonly quoted ranges vary — confirm per deal | Often short-term and interest-only, structured around an exit strategy |
Private lending is a real, sizable part of the Ontario market — FSRA's 2024 data puts private lenders at 15.8% of mortgages by number (down slightly from 16.8% in 2023) and 12.5% by dollar value, even as growth in traditional lending outpaced it that year.
04 · Does a broker need a different licence to arrange a private-lender deal?
In Ontario, yes. Since April 1, 2023, Agent Level 1 licensees can only deal and trade in mortgages with financial institutions or lenders approved under the National Housing Act. Agent Level 2 licensees are authorized to deal with the full range of lenders, including mortgage investment companies, syndicates, and private individuals — see our companion piece on Mortgage Agent Level 1 vs. Level 2 in Ontario for the full licensing detail.
That split isn't a formality — it's the regulatory gate that determines whether a given agent can legally arrange a private-lender file at all, regardless of how well they understand the product.
05 · What does managing a B or private-lender file responsibly actually look like?
FSRA has made the exit-strategy conversation a specific supervision focus, and the data shows it's working: 60% of consumers who used a broker to obtain a mortgage from a non-traditional lender in 2024 reported discussing an exit strategy back to a traditional lender, up from a 2023 study that found 43% of private-mortgage borrowers had no exit plan in place at all.
Documenting the exit conversation isn't optional paperwork: It's the single change regulators point to as protecting clients in this segment — and it's exactly the kind of file discipline Treadstone's fulfillment associates help keep consistent across every file, not just the easy ones.
Consistent file discipline, across every tier
Package the B and private files as carefully as the A files.
Treadstone's fulfillment associates handle documentation and condition-clearing across the full lender spectrum, so exit-strategy notes and disclosures don't get skipped on the harder files.
Frequently asked questions
This article is general information to help you scale — not a substitute for tailored advice on your specific business, licensing, or compliance obligations. All figures are illustrative examples for planning purposes; actual costs vary by province, market, and brokerage.