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A balance sheet lender funds mortgages using its own capital or deposit base and holds the resulting loans on its own books, rather than selling them into securitized pools. This is the traditional deposit-funded lending model, most associated with banks and credit unions.
A deposit-taking institution — a bank or credit union — can fund new mortgages largely from customer deposits and its own capital, keeping the mortgage on its balance sheet for the life of the loan or until it chooses to sell or securitize it.
This contrasts with a monoline lender, which typically does not take deposits and instead relies on securitization or wholesale funding lines to originate mortgages, since it has no deposit base of its own to lend from.
Banks and credit unions are the classic example: deposit-taking institutions regulated federally (OSFI) or provincially for many credit unions commonly fund mortgages primarily as balance sheet lenders.
Not mutually exclusive with securitization: a balance sheet lender can still choose to securitize some mortgages later; the label describes the primary funding model, not an absolute rule.
Affects risk retention: a balance sheet lender keeps the credit risk of the mortgages it holds, which can shape how conservatively it underwrites files compared with a lender planning to sell the mortgage on.
Still originates through the broker channel: many balance sheet lenders, including bank subsidiaries and credit unions, actively fund broker-originated mortgages alongside their own direct channels.
Definitions reflect Canadian federal and provincial rules as of the “Updated” date above. Not advice for any specific file.
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