FinviloThe Canadian mortgage stress test: how qualifying rates work
Federally regulated lenders must check that you could still afford your payments at the greater of your contract rate plus 2 percentage points or 5.25%. You pay your actual contract rate; the higher rate is only used to decide how much you qualify for.
Which lenders apply it
The rule comes from OSFI Guideline B-20 for federally regulated lenders, which includes the major banks. Insured mortgages (under 20% down) face the same qualifying rate test through federal mortgage insurance rules. Some provincially regulated credit unions and private lenders use their own standards, so ask each lender which test they apply.
Why it lowers your maximum
Lenders compare your housing costs and total debts with your income using debt service ratios. Testing at a higher rate makes those ratios look larger, so the maximum mortgage shrinks. Use the mortgage calculator to see the payment at both your expected rate and the qualifying rate.
Renewals and switching lenders
Since November 2024, OSFI no longer expects a stress test when an uninsured borrower switches to a new federally regulated lender at renewal without increasing the loan or amortization. Confirm how a specific lender treats your switch before you commit.
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Frequently asked questions
- Do I pay the qualifying rate?
- No. It is only used for approval. Your payments are based on the rate in your mortgage agreement.
- Does the stress test apply to variable-rate mortgages?
- Yes. The same greater-of rule applies, using the variable contract rate plus 2 points or 5.25%.
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Official sources
General information only, not personalized financial, tax or legal advice. Rules change; confirm current details with the source.