A lenders, B lenders, and private lenders sit on a spectrum of flexibility and cost. A lenders, typically major banks and large mortgage finance companies, offer the lowest rates but require standard income documentation and strong credit. B lenders are alternative lenders who work with borrowers who don't fit A lender criteria, typically at higher rates in exchange for more flexible underwriting. Private lenders operate outside the regulated bank and credit union system and typically charge the highest rates over the shortest terms.
| Feature | A Lenders | B Lenders | Private Lenders |
|---|---|---|---|
| Who they are | Major banks and large mortgage finance companies | Alternative and non-bank lenders | Individuals or companies outside the regulated banking system |
| Typical borrower | Standard income, strong credit, conventional down payment | Non-standard income documentation, self-employed, or credit challenges | Borrowers who can't qualify with A or B lenders |
| Rates | Lowest available | Higher than A lenders | Highest of the three |
| Typical term length | Standard terms, often 1 to 5 years | Often shorter terms | Usually shortest, often 1 year or less |
| Income documentation flexibility | Strictest, standard proof required | More flexible, alternative documentation accepted | Most flexible, often equity-focused over income |
| Regulation | Federally or provincially regulated financial institutions | Regulated lenders, with more flexible guidelines | Outside the regulated bank and credit union system |
The verdict
If you have steady, easily documented income, good credit, and a standard down payment, an A lender will almost always get you the lowest cost of borrowing. If your income is harder to document, a B lender can bridge the gap with more flexible criteria at a higher rate, often as a temporary step while you rebuild toward A lender qualification. Private lending is generally a shorter-term solution for borrowers who can't qualify anywhere else. Because eligibility varies between individual lenders, a mortgage broker can assess your file and match you to the right lender.
Have questions about your situation? An advisor can walk you through it.