What is the mortgage stress test, and how does it affect me?
The mortgage stress test is designed to determine whether borrowers can afford their mortgage payments if interest rates are higher than their contracted rate. For federally regulated lenders, qualifying borrowers generally must demonstrate they can afford payments using the greater of their mortgage contract rate plus two percentage points or the applicable minimum qualifying rate. The rules and exemptions can vary depending on the mortgage transaction and lender. Your mortgage professional can explain how the stress test affects your purchasing power.

The Mortgage Stress Test in Brief


  • The stress test checks whether you can handle higher interest rates.
  • The qualifying rate is the greater of your contract rate plus 2% or 5.25%.
  • It applies to insured and uninsured mortgages from federally regulated lenders.
  • It can reduce the maximum amount you're approved to borrow.

How It Works


Suppose your mortgage rate is 4%. The lender must qualify you at 6%, the higher of 4% plus 2% or 5.25%. Your debt service ratios are calculated using the payment at that higher rate, even though you'll actually pay the lower rate.


Who It Applies To


The rules apply to mortgages from banks and other federally regulated lenders. Some provincially regulated lenders, such as certain credit unions, may use different qualifying rules, although many follow similar standards.


Exemptions at Renewal


If you renew with your current lender, you generally don't need to requalify. Since late 2024, borrowers who switch lenders at renewal without increasing their mortgage amount or extending their amortization are also generally exempt.


Ways to Increase Purchasing Power


  • Increase your down payment
  • Pay down other debts
  • Choose a 30-year amortization if you're eligible
  • Add a co-borrower
  • Consider a lower purchase price

Talk to a Mortgage Professional


The stress test can have a meaningful impact on your budget. A mortgage professional can calculate your qualifying amount and explain how different choices affect your approval.