Private Lending in Canada 2026: What Mortgage Brokers Need to Know About OSFI’s New Rules
Canada is heading into a year of tighter bank rules — and that means private lending will play an even more critical role for borrowers and real estate investors who no longer fit inside the new underwriting boxes.
As we move into 2026, brokers should be prepared for more client files being redirected from the bank channel into the private and alternative space. Here’s what’s changing and how Keystone can support you and your clients.
OSFI’s New Rental Property Rules (Effective Early 2026)
Canada’s banking regulator, the Office of the Superintendent of Financial Institutions (OSFI), has finalized updates to its Capital Adequacy Requirements (CAR) guideline that take effect in the first quarter of 2026. These changes will influence how lenders classify and underwrite mortgages — especially those tied to rental or investment properties. OSFI+1
1. No More Income Double-Counting
Under the updated rules, income used to qualify a borrower for one mortgage cannot be used again to qualify for another. That means rental or employment income must be treated on a property-by-property basis rather than recycled across multiple purchases, reducing portfolio leverage power. OSFI+1
2. IPRRE Classification for Rental-Heavy Loans
Mortgages where more than 50% of qualifying income comes from the property’s rental income will be classified as Income-Producing Residential Real Estate (IPRRE). These loans carry higher capital requirements for banks because they’re considered higher risk, which can translate into tighter approvals, additional documentation, and potentially higher costs for borrowers. OSFI+1
3. Higher Costs & Stricter Terms for Banks
Because lenders must hold more capital against loans classified as IPRRE, they’re expected to underwrite these deals more conservatively. This could include higher pricing, reduced borrowing power, and greater scrutiny of income documentation. OSFI+1
Bottom line: Scaling a rental portfolio through traditional lenders becomes tougher in 2026 — especially for investors who have relied on double-counting income across multiple properties.
What This Means for Brokers
With these changes rolling out, more investor clients will get squeezed out of the bank channel — particularly those with multiple properties or heavy reliance on rental income.
That means:
Bridge financing will increase as buyers face tighter timelines and tougher approvals.
Acquisitions, refinances, and equity take-outs will shift toward private lenders who underwrite based on collateral strength, realistic cash flow, and exit strategies.
Speed and flexibility matter more than ever — and brokers who bring private options to the table early will be best positioned to help clients close deals.
Market Snapshot: Private Lending’s Growing Share
Private and alternative lenders now represent an estimated 8–12% of Canada’s mortgage market, roughly double their share from just five years ago. This segment consistently grows fastest precisely when OSFI tightens underwriting standards — and 2026 is shaping up to be no exception.
How Keystone Helps Brokers Win More Files
Keystone is built for the type of investor and borrower who will feel the impact of OSFI’s changes most.
We offer:
Quick decisions and fast closings — ideal when bank approvals stall
Flexible structures tailored to the deal, not rigid checkboxes
Interest-only payments to support investor cash flow
Common-sense underwriting, based on collateral strength and exit plans
If your clients are running into roadblocks at the banks heading into 2026, private lending isn’t just a backup plan — it’s becoming a strategic part of the lending landscape.
📧 Reach out to Keystone MIC today to discuss how we can help.
