First National Financial Mortgage Review: Rates, Lending Guidelines and Who They Suit

First National Financial Mortgage Review: Programs & Lending Guidelines

How First National Financial'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.

First National's Mortgage Offering — Residential

First National is one of the largest non-bank lenders in Canada, working entirely through mortgage professionals, with a prime shelf under its own name and an alternative shelf branded Excalibur.

Prime. Insured, insurable and conventional lending on purchases, refinances and transfers. Owner-occupied homes of one to four units, second homes and cottages, and a full conventional rental program. Purchase-plus-improvements is available; refinance-plus-improvements is not.

A deliberately deep transfer offering. Standard-charge transfers with legal and valuation costs covered and up to $3,000 of the outgoing lender's fees capitalized, plus collateral-charge transfers — moving a running account, secured line of credit or second mortgage into a First National product, which many lenders will not do.

Excalibur. The alternative shelf: self-employed income on bank statements, bruised credit, net worth lending, and rentals for small investors. Nothing here is insured. It carries a graduation program back to the prime side at renewal, with no legal fees and an automated valuation where possible.

Home equity credit. No conventional line of credit on the prime side. Excalibur instead offers a Home Equity Secured Mastercard — a credit card secured against the home, which can sit in second position behind another lender's mortgage, standard or collateral, and is one of the more unusual products in this directory.

Also available: bridge financing, second mortgages for existing clients, spousal and sibling buyouts, leasehold properties, and multi-family apartment financing through a commercial team.

First National Income and Qualification Requirements

Ratios by program.

Credit score drives the prime ratios directly — 680 is the line between 39/44 and 35/42, and four points of GDS is a lot of house.

Qualifying rate. The greater of the contract rate plus two points or the benchmark. The stress test is no longer applied at renewal on conventional uninsured transfers coming from a federally regulated institution.

How income is read. Permanent employees provide a recent employment letter and a pay record or two months of deposits; probationary income is accepted. Fluctuating income — overtime, bonus, commission, contract — is averaged over two years, and where the most recent year varies by more than 20% from the average, the lower year is used. Contract work needs a term of at least twelve months, reasonably renewable. Union employment needs confirmation from both the union and the employer.

Self-employed borrowers on the documented route provide two years of returns and assessments, qualifying on the two-year average with a modest gross-up on the applicable line and add-backs available to sole proprietors. There is a stated-income insured route to 90% of value for borrowers two years in business with strong Canadian credit, and an enhanced insured route for those under two years assessed on business establishment and reserves. On Excalibur, income is established from twelve months of bank statements plus a signed declaration and supporting contracts or invoices, with deposits less expenses producing the qualifying figure.

Pension income counts, public and private alike. Investment income counts against filed returns and current statements. Disability income counts at full value, with non-taxable amounts grossed up. Maternity and parental leave counts at full employment income, including extended eighteen-month leaves, where the return date, position and salary are confirmed. Support income counts at full value with an executed agreement. Child benefits count for children up to fifteen, capped at half of qualifying income and never as the only source. Foster income counts up to half of total income with two years of experience. Employment Insurance counts where the pattern is reasonable. Rideshare and delivery income counts with two to three years of consistency. A taxable car allowance is added to income; a non-taxable one is not counted.

Tax arrears matter. Anything above the lesser of 5% of reported income or $5,000 must be confirmed paid, whether or not the assessment was used for income.

Down payment. 90 days of history on savings, three months on investments. Rent-to-own and vendor take-back funds are not accepted. Borrowed down payment is permitted on insured files through a flexible down payment route, including funds from non-immediate family, with the repayment carried in the ratios.

First National's Specialty Programs

Medical professional program (prime). Physicians, dentists and veterinarians who are recent graduates, residents, fellows or newly practising can finance to 95% of value on an insured basis, with a 120-day rate guarantee and as little as 5% down from their own or gifted resources, the rest of which can be borrowed. Foreign-trained physicians qualify where licensed and settled in Canada. Eligibility windows are measured from the end of training — roughly two years for physicians and dentists, and a shorter one for veterinarians.

New to Canada (prime). Newcomers within five years, to 95% of value on one or two units and 90% on three or four, with 80% available conventionally. Permanent residents need three months of full-time work; non-permanent residents need a valid permit and face additional conditions. Credit can be established from twelve months of statements and utility bills where there is no bureau file.

Rate Option Plus (prime). A lower-rate, reduced-feature mortgage: insured or insurable, a five-year fixed term, 15% prepayment privileges retained, but not portable, not assumable, and carrying a penalty of at least 2.75% of the balance if broken. The saving is real and so is the cost of flexibility — it suits a borrower certain they will stay put.

Cottage and recreational lending (prime). Two categories: a full-featured one requiring year-round access, winterization, permanent heat, potable water and a permanent foundation, financed to 95%; and a second, insured and purchase-only, that accepts seasonal access, water access and a floating foundation with no permanent heat to 90% of value, with a strong credit score and own-resource down payment. Very few lenders finance the second type at all.

Leasehold properties (prime). University and municipal ground leases are financed, owner-occupied, depending on the remaining lease term.

Excalibur net worth program. Two tiers: assets equal to a quarter of the mortgage supporting 80% lending with debt service to 65%, and assets equal to half supporting 65% lending with debt service to 80%. Minimum score 600, loans to $1.5 million, amortization to 30 years. Investment statements, bank balances and proceeds from a sold property count; equity in other property or a business, life insurance, locked-in accounts and gifts do not. One net worth mortgage per borrower, and pension-only income does not qualify.

Excalibur extended ratio program. 60/60 with no rate premium, owner-occupied and rental, requiring a score of 670 generally and 720 for the top loan-to-value tier. Owner-occupied files here must be majority self-employed income; rentals accept fully salaried applicants.

Excalibur rental program. For small investors, to 80% on purchases, with a minimum score of 600, 20% down from own or gifted funds, a $100,000 net worth requirement, and a limit of four rental properties held personally.

Home Equity Secured Mastercard (Excalibur). A revolving credit line accessed by card, to 65% of value on its own and 80% including registered mortgages, with the limit tiered by credit score. It can be registered behind another lender's mortgage, except a private or reverse mortgage.

Second mortgages (prime). Available to existing First National clients where a blend cannot be done — a one-year fully open term at prime plus a margin, to 80% combined.

Minimum Credit Scores & Treatment of Liabilities

Scores.

Credit history. On the prime side a bankruptcy needs two years since discharge and two years of re-established credit across two major unsecured revolving accounts, must be explained by a genuine life event, and only one is permitted. On Excalibur the wait is six months past discharge, with one major credit event allowed and a reasonable explanation for derogatory items — a four-year difference between the two shelves for the same borrower.

Both bureaus are used.

Liabilities. Credit cards and unsecured revolving credit at 3% of the balance. Instalment loans at the reported payment, or 5% where none is reported, with loans nearly repaid excludable. Car leases always count. Student loans at the reported payment or a small percentage of the balance. Secured lines of credit at the balance amortized over 25 years at the qualifying rate — and on uninsurable files, qualified on the limit rather than the balance, which is a meaningful difference for a borrower with a large unused line. Support payments count as a liability.

Heating is calculated from square footage on published per-foot rates, higher for houses than condominiums, and the figure submitted cannot be changed later. Shelter costs for a borrower not occupying the property run by market, with reductions where they live with a spouse or family.

Closing costs at 1.5% of the purchase price, with 90 days of history and a lighter requirement for first-time buyers.

Terms & Amortization Options

Terms. Prime: fixed at one to five, seven and ten years, and a five-year variable. Rentals add convertible options where five years or more remain. Excalibur: one to three years only, fixed.

Amortization. Minimum ten years. Insured and insurable: 25 years, extending to 30 for first-time buyers and newly built homes — only one applicant needs to be a first-time buyer. Conventional uninsurable: 30 years. Rentals: 30 years. Excalibur: 30 years.

Payments. Weekly, biweekly, semi-monthly and monthly.

Prepayment. Fixed: 15% lump sum annually, a 15% payment increase once a year, and double-up payments. Adjustable: 15% lump sum and double-up. Unused privileges can be exercised before requesting a payout statement, which reduces the balance the penalty is calculated on — worth doing in the right order.

Penalties. Adjustable: three months' interest for the whole term. Fixed: the greater of three months' interest or an interest rate differential. Rate Option Plus carries a floor of 2.75% of the balance. Excalibur follows the standard three-months-or-differential test with no bona fide sale clause, so the mortgage can be discharged at any time on payment of the penalty.

Porting. Available on request, including a port with an increase blended into a new rate. Variable-rate mortgages can only be ported on the same day, with no increase and no gap between the sale and purchase. Rate Option Plus is not portable. Excalibur ports at the same or a lower amount, with a new application and the maturity date unchanged.

Rate holds. 120 days on prime purchases and transfers; on Excalibur, 120 days on a purchase and 90 on a refinance. Conventional pre-approvals are available for 120 days, fully underwritten on a soft basis with no documents reviewed. No pre-approvals on stated income.

Renewal. Where a borrower does not respond, the mortgage defaults to a six-month open term.

Special Notes

• Six months past a bankruptcy discharge on Excalibur, against two years on the prime side. For a borrower recently discharged, that is the whole conversation.
• A secured Mastercard that sits behind another lender's mortgage. Nothing else in this directory offers revolving home equity credit in second position behind an outside first mortgage in that form.
• The graduation program. Excalibur files can move to the prime side at renewal with updated credit and income, no legal fees, and an automated valuation where it works.
• Collateral-charge transfers are accepted, including running accounts, secured lines and second mortgages — the thing that usually traps a borrower at their existing lender.
• 680 is the pivot on prime ratios, moving GDS and TDS from 35/42 to 39/44.
• Rate Option Plus trades flexibility for rate. Not portable, not assumable, and a minimum penalty of 2.75% of the balance.
• Cottages with seasonal or water access and no permanent heat are financed on an insured purchase — a property type most lenders here decline outright.
• Secured lines of credit are qualified on the limit, not the balance, on uninsurable files.
• Extended ratios at 60/60 with no rate premium on Excalibur is unusually generous for an alternative shelf.
• Refinance equity take-out is capped at a standard maximum, and tax arrears cannot be included in a refinance.
• No lender fees on the prime side. Excalibur charges a fee, higher on the secured Mastercard.
• A complimentary home system warranty covering heating, cooling, electrical, plumbing and water heating runs for the first year on new mortgages.
• Property standards. No timeshares, raw land, rooming houses, student housing, co-operatives, operating farms, bed and breakfasts, former grow operations, rental pools, mobile homes, condominium hotels, adult lifestyle communities, fractional interests, or homes with under 100 amp service. Houses under 850 square feet must be insured. Small condominiums are financed on an insured basis, with minimums lower in the largest cities than elsewhere.

Service Area

Prime lending is national. Purchases in Yukon and the Northwest Territories are considered, with insured files preferred for strong applicants. A regional sliding scale applies, with separate limits for British Columbia, Ontario and the Atlantic provinces, the Prairies and Quebec.

Excalibur is by named market, not by province: Ontario; the Atlantic provinces through selected cities in Nova Scotia, New Brunswick, Prince Edward Island and Newfoundland; British Columbia; Alberta through Calgary, Edmonton, Red Deer and others; Manitoba; and Saskatchewan. The extended ratio program is narrower still, running in Ontario, British Columbia and the two largest Alberta cities.

Excalibur rentals require a market of at least 25,000 people with genuine resale demand.

Rural properties on the prime side are valued at the house plus five acres, with no maximum parcel size subject to the acreage and location sliding scale. Agricultural reserve land is considered where it is not a working farm or income-producing. Log homes are acceptable where they are marketable locally, and proximity to a wind farm is assessed on zoning and marketability. Hobby farms are non-preferred but not automatically declined.

Second mortgages are not offered in the territories.

Loan-to-Value Treatment

Prime

Excalibur

On Excalibur, loan-to-value buys ratio room: 50/50 up to 80% of value, and 55/55 below 65%. More equity means more debt service tolerance.

The prime sliding scale varies by region and reduces lending above market-specific thresholds, so the effective ratio on an expensive property is lower than the headline. Excalibur has no sliding scale at all, with a flat maximum loan instead — which on a high-value property in a large market can make the alternative shelf lend more than the prime one.

Minimums. Prime loans from $50,000, transfers from $75,000, minimum purchase price around $130,000. Excalibur from $100,000, to $1.5 million, with exceptions to $2 million in the Greater Toronto Area.