What is the role of approved lenders in the Canadian mortgage system?

What the Law Says

The National Housing Act authorizes the federal government to formally recognize financial institutions as 'approved lenders' — a key step that enables them to participate in Canada’s insured and government-supported mortgage system.

Approved lenders play a central role in delivering housing finance across Canada. They originate mortgages for homebuyers and renters, often with backing from the Canada Mortgage and Housing Corporation (CMHC) or other federal programs.

To qualify, an entity must be designated by the Minister of Housing and Diversity and Inclusion under section 5 of the National Housing Act. Once approved, the lender gains authority under section 6 to make housing loans secured by mortgages or hypothecs on residential property.

This designation is not automatic — it reflects regulatory oversight and ensures lenders meet standards for financial soundness, consumer protection, and compliance with federal housing policy.

Statutory Text

Minister may designate entities as approved lenders for the purposes of housing loans.

— National Housing Act, s. 5 — Designation of approved lenders

Statutory Text

Approved lenders may make housing loans on the security of mortgages or hypothecs on residential property.

— National Housing Act, s. 6 — Powers of approved lenders

What to Do

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