The mortgage stress test forces you to prove you could still afford your loan at a rate higher than the one you are offered. Lenders qualify you at the higher of your contract rate + 2% or 5.25%. Run your numbers through our mortgage calculators and watch the source rate on our live rate tracker.
The stress test makes you qualify at the higher of your contract rate plus 2% or the 5.25% minimum qualifying rate. It applies to insured and uninsured mortgages at federally regulated lenders. Your housing costs must fit within a 39% GDS ratio and total debts within 44% TDS. This is not financial advice.
The stress test is a federal underwriting rule, set by the Office of the Superintendent of Financial Institutions (OSFI), that every buyer at a bank must pass. Instead of qualifying you at the rate you will actually pay, the lender qualifies you at a higher qualifying rate. The idea is a buffer: if the Bank of Canada raises rates or you renew into a higher-rate world, you should still be able to make your payments. Introduced in its current form after years of rising home prices, it is designed to keep households from borrowing right up to the edge of what they can afford today.
The rule is simple: your qualifying rate is the higher of your contract rate plus 2 percentage points, or 5.25% (the minimum qualifying rate). If your lender offers you 4.5%, you are tested at 6.5% because that beats 5.25%. If a promotional rate of 3.0% were on offer, you would still be tested at 5.25% because 3.0% + 2% = 5.0% is below the floor. You qualify on the higher rate but pay the contract rate — the gap is your built-in cushion. Fixed-rate borrowers and variable-rate borrowers are both measured this way, and the same test applies at renewal if you move to a new federally regulated lender.
Yes to both. An insured mortgage (less than 20% down, requiring default insurance) and an uninsured mortgage (20% or more down) are each subject to the stress test at federally regulated lenders. The size of your down payment changes your insurance premium and loan amount, but not whether the test applies. Provincially regulated credit unions and some private lenders are not bound by OSFI's rule, though they often price loans higher to compensate for the added risk.
Alongside the qualifying rate, lenders check two affordability ratios, both calculated using the qualifying rate rather than your contract rate:
| Ratio | What it covers | Limit |
|---|---|---|
| GDS (Gross Debt Service) | Mortgage payment, property tax, heat, half of condo fees | ≤ 39% |
| TDS (Total Debt Service) | All GDS costs plus car loans, credit cards, other debt | ≤ 44% |
If either ratio is exceeded at the qualifying rate, the lender will reduce the amount you can borrow. That is why carrying credit-card balances or a car loan can shrink your maximum mortgage even when your income is strong.
Because you qualify at a higher rate, the maximum mortgage you can carry is smaller than your income alone would suggest. Consider an illustrative example: a household with $110,000 of income and no other debt might be approved for a payment that fits within GDS/TDS at a 6.5% qualifying rate, even though their actual contract rate is 4.5%. Qualifying at 6.5% rather than 4.5% can cut the approved mortgage by tens of thousands of dollars. To see how policy moves feed into rates, watch the next rate decision on July 15, 2026 and review our rate history and inflation pages.
It is a rule that requires you to prove you could still afford your mortgage at a higher rate than the one you are offered. Your lender qualifies you at the higher of your contract rate plus 2% or 5.25%, so a rate increase or renewal shock would not push you into default.
The qualifying rate is the higher of your contract rate plus two percentage points or 5.25%. For example, at a 4.5% contract rate you would be tested at 6.5% because that is higher than 5.25%.
Yes. At federally regulated lenders the stress test applies to both insured mortgages (less than 20% down) and uninsured mortgages (20% or more down). The same higher-of-contract-plus-2%-or-5.25% qualifying rate is used.
Gross Debt Service (GDS) measures housing costs against income and should be at or below 39%. Total Debt Service (TDS) adds your other debt payments and should be at or below 44%. Both are calculated using the qualifying rate, not your actual contract rate.
You cannot avoid it at a federally regulated bank. Some provincially regulated credit unions and private lenders are not bound by it, but they may charge higher rates. As of Nov 2024, switching lenders at a straight renewal no longer requires re-passing the stress test at many lenders.