Desjardins Mortgage Review: Rates, Lending Guidelines and Who They Suit

Desjardins Mortgage Review: Programs & Lending Guidelines

How Desjardins's lending guidelines read from the broker side — the programs on the shelf, how income is qualified, credit floors, terms and where they lend. Consumer-facing policy only: broker submission mechanics and compensation are out of scope, and guidelines change, so confirm anything you are planning around with the lender or a licensed broker.

Desjardins' Mortgage Offering — Residential

Desjardins is a co-operative financial group lending through the broker channel in Ontario and Quebec, and it behaves more like a member-owned institution than a wholesale lender — the relationship matters, and so does the local caisse.

Core lending. Insured mortgages, and conventional mortgages to 80% of value, on purchases, transfers and refinances. Single-family homes, semi-detached, townhouses and condominiums; second and vacation homes; and rental properties.

Rentals go further here than at most lenders. One to four units through the standard programs, and five to eight units through the broker channel at reduced loan-to-value and amortization — small multi-unit financing that most broker-channel lenders push to a commercial desk. A borrower can hold up to twelve rental units financed with the group, within an overall exposure limit.

Versatile Line of Credit. A collateral-charge home equity product that holds several loans at different rates and terms under one registration, with credit restored as balances are repaid and the ability to convert a drawn line into an amortizing loan. Available on owner-occupied homes, owner-occupied properties with rental units, and second homes — not on pure rentals.

Also available: bridge financing, purchase- and refinance-plus-improvements, raw land financing (with better terms where construction is planned within a year), mobile homes on owned land, and spousal buyouts.

Commercial financing and self-build construction are handled outside the broker channel.

Desjardins Income and Qualification Requirements

Ratios by program.

32/42 on conventional lending is tight — several points below the 39/44 most lenders publish. Desjardins is not a stretch-the-ratios lender, and a file that needs room will price better elsewhere. The Versatile Line of Credit qualifies on the whole approved limit at the greater of its qualifying rate plus two points or the benchmark.

Qualifying rate. The greater of the contract rate plus two points or 5.25%.

How income is read. Permanent employees must have finished probation. Variable income — commission, overtime, tips, bonuses, seasonal work, casual hours — needs two years of history and is taken at the lesser of the two-year average or the most recent year, which is a conservative reading in a rising-income situation. With less than two years, conventional files average from the start of employment.

Self-employed income is calculated three ways depending on the file: net income with a modest gross-up, net income with add-backs for capital cost allowance, vehicle and home-office expenses, or a business surplus calculation adjusted for loans. A borrower paid through their own corporation is treated as self-employed.

Pension and retirement income counts, with insured files needing more proof than conventional ones. Investment income counts where the underlying assets support it. Support income counts where there is a court order or signed agreement and proof of receipt. Child benefits count for children up to fourteen, capped at 30% of qualifying income, and cannot be grossed up. Foster income counts net of expenses, and where it makes up more than half of income a larger down payment is required. Employment Insurance is capped at 30% of qualifying income on insured files. Disability income counts, temporary or permanent, with the appropriate confirmation. Provincial disability income is converted to a gross figure. Non-taxable income from Indigenous tax-exempt sources and foster care is grossed up on the standard sliding basis. A taxable car allowance counts.

Documents, generally. Recent proof of current income no more than 60 days old, plus two years of history through assessments and tax slips; 90 days of history on down payment funds; a signed gift attestation and the donor's statement where funds are gifted; leases or a rental schedule where rentals are involved. Foreign-language documents need certified translation.

Desjardins' Specialty Programs

Professionals and residency program. Physicians and residents can qualify on program income with a residency letter setting out specialty, position and expected earnings, alongside preferential rates and business financing. It comes with a condition worth knowing up front: the full banking relationship moves to the caisse.

Military and Department of National Defence program. One of the more substantial forces offerings in the market. A mortgage transferable without penalty on a posting, support with relocation claims, expedited authorization, financing on properties outside Quebec, simplified employment confirmation, bridge loans, land and construction financing, and familiarity with the service-specific insurance and Veterans Affairs programs. For a posted member, the penalty-free transfer alone can be worth more than a rate difference.

New to Canada. Newcomers within five years, permanent residents, and temporary residents on a work permit with at least 183 days in Canada. Financing to 80% under the credit union's own guidelines, and higher through an insured program. Credit is established from a bank reference, twelve months of statements, and two payment references. Family purchases require a co-borrower.

Small multi-unit (five to eight units). Available through the broker channel to 75% of value over 25 years, with limits on units per property, total units financed and overall exposure. This is the standout: most broker-channel lenders stop at four units.

Raw land. To 80% where no construction is planned, and up to full value where construction begins within twelve months and the whole project pre-qualifies.

Cashback and transfer incentives. Cash toward legal and appraisal costs on a transfer with no rate increase, subject to loan size, term and score conditions; a larger cashback in exchange for a small rate increase; and a first-time buyer promotion tied to bundling home insurance and taking a longer closed term. These run in windows, so timing matters.

Flex Down. Borrowed down payment funds on insured owner-occupied purchases only, with the repayment counted in the ratios. Not available on conventional, rental or vacation home purchases.

Minimum Credit Scores & Treatment of Liabilities

Scores. 650 on owner-occupied conventional lending and on the Versatile Line of Credit. 675 on insured mortgages and on rentals. 720 for a pre-approval, which is a notably high bar — Desjardins issues real pre-approvals but reserves them for strong files.

Credit history. A bankruptcy or consumer proposal must be discharged more than two years, with credit re-established through at least two active tradelines showing twelve to twenty-four months of satisfactory repayment. Approval is assessed as a whole, and meeting the minimums does not carry a file on its own.

Liabilities. Credit cards and lines of credit count at 3% of the balance or the minimum payment, whichever is greater. A home equity line counts on the full balance at the qualifying rate over 25 years. Condominium fees count at half. Property taxes are always included — even where they have been waived, prepaid or bundled into something else. Heating comes off a standardized chart based on square footage and heating source, with documented actual costs usable instead. Student loans, vehicle loans and guarantor obligations all count. Debts with three months or less remaining can be excluded where they are not being replaced.

Shelter cost. A borrower's current rent is counted, and where there is no rent or an implausibly low one, a market figure for the area is substituted.

Only Equifax is used.

Terms & Amortization Options

Terms. Closed fixed rates from six months to ten years — a wider range than most, with genuine short terms at one end and a ten-year at the other. On the variable side there are three distinct products rather than one: a protected variable with a static payment and a cap on increases, a reduced variable at a discount and convertible to fixed, and a regular variable that is open. There is also a five-year rate resetter that adjusts annually.

Amortization. Conventional to 80% of value: up to 30 years, though the file must qualify on a 25-year schedule — a real constraint, since it removes the qualifying benefit of the longer amortization while leaving the payment relief. Insured: up to 30 years for first-time buyers and new builds. Rentals of one to four units: 30 years. Rentals of five to eight units: 25 years. Unusual or higher-risk properties can be capped at 20 years.

Payments. Monthly, weekly, biweekly, and accelerated weekly or biweekly.

Prepayment. On closed fixed terms, up to 15% of the original amount each year and the option to double the payment once a year. Open products allow unlimited prepayment. The variable and resetter products carry the same privileges as the closed fixed.

Penalties. Fixed: the greater of three months' interest or an interest rate differential. Variable and resetter: three months' interest. Any cashback received is repaid on early payout, which is the trade-off behind the transfer incentives.

Registration is a collateral charge, which affects how easily the mortgage can be moved at maturity and is worth weighing against the transfer cashback that brought the borrower in.

Rate holds and pre-approvals. Rate guarantees are available on purchases, transfers and refinances, with extended guarantees carrying a premium; a change to the borrower, product, term, amount, amortization or property use voids the guarantee. Pre-approvals run six months, purchases only, and require a 720 score.

Porting is available in Ontario, subject to requalification, with the new property inside the network. The penalty is charged and refunded where the sale and purchase close the same day.

Special Notes

• Ratios are tighter than the market. 32/42 on conventional lending, against 39/44 almost everywhere else. On a file with room to spare this costs nothing; on a stretched file it is decisive.
• A 30-year amortization must qualify at 25. The longer schedule lowers the payment but not the qualifying test.
• Five to eight units through the broker channel. Genuinely unusual, and the reason a small multi-unit file lands here.
• The military program is substantive, not a rate discount with a badge on it. Penalty-free transferability on a posting is the piece that matters.
• Collateral charge registration on everything. Convenient for adding credit later, less convenient for switching lenders at maturity, and worth understanding before signing.
• Terms run from six months to ten years, and there are three separate variable-rate products with different risk profiles.
• Cashback is repayable on early payout. The transfer and first-time buyer incentives are real money, and they come back if the mortgage is broken.
• No lender fees.
• Powers of attorney are generally not accepted, and rent-to-own, vendor take-back financing and assignments are not available through the broker channel.
• Property standards. No condominium hotels, co-operatives, resort or rental-pool properties, life lease, adult-living communities, mobile homes on leased land, or loans to management companies. Undivided co-ownership is possible with the right agreement. Three-season, off-grid and island properties are considered at reduced loan-to-value and shorter amortization. Flood and landslide zones are reviewed individually.
• A local branch relationship is part of the model. Rural properties need to be within 75 kilometres of a branch, and porting requires the new property to be inside the network.

Service Area

Ontario and Quebec only.

An Ontario borrower can finance a Quebec property, and a Quebec property can be financed where the borrower lives in Ontario, but the primary residence for a second-home purchase must be in Ontario. There is no lending in the West, the Atlantic provinces or the territories.

Rural properties are eligible case by case where zoning is residential or agricultural, title is in a personal name, no farm income is used to qualify and no commercial operation runs on the land. Lending value covers the home plus up to ten acres, with more considered individually, and the property must sit within 75 kilometres of a caisse branch — a real constraint on remote properties that other guidelines do not impose.

Loan-to-Value Treatment

The sliding scale. In the Greater Toronto and Greater Ottawa areas, owner-occupied lending runs to 80% on the first $1.2 million and 60% on the balance, with no absolute cap — a more generous treatment of the excess than the 50% most lenders apply, though the threshold is lower.

Rental income treatment. Half the gross rent is added to income with no deductions, and a net surplus or deficit is worked out separately. Where a unit is under construction, has no lease, or the stated rent looks inconsistent, a market rent appraisal is required.

Down payment structure on rentals. Gifted funds are permitted from immediate family, but at least 5% must come from the borrower's own savings, investments or registered funds.