Mortgage guide
The Canadian mortgage stress test, explained
The stress test estimates whether a borrower could handle a higher interest rate. It does not set the rate you actually pay or guarantee a lender will approve an application.
Which rate is used?
The qualifying rate is the higher of your contract interest rate plus two percentage points or 5.25%. For example, a 4.5% contract rate yields a 6.5% qualifying rate. Your estimated actual monthly payment still uses the 4.5% contract rate.
The extra-rate calculation tests debt-service ratios. It is not an extra interest charge on your mortgage. Lenders can also consider credit, property, employment and their own policies.
What do GDS and TDS measure?
Gross debt service (GDS) compares estimated housing costs — the qualifying mortgage payment, property taxes, heating and 50% of condo fees where applicable — with gross monthly income. Total debt service (TDS) adds other monthly debt payments.
Our affordability estimate uses CMHC qualification benchmarks of 39% GDS and 44% TDS. Being below those figures is not an approval, and individual lender requirements may differ.
What about renewing or switching lenders?
OSFI no longer prescribes the minimum qualifying rate for an eligible uninsured straight switch between federally regulated lenders at renewal when neither the loan amount nor the remaining amortization increases. The receiving lender still assesses the application under its underwriting requirements.
An insured mortgage, a refinance, increased borrowing or a change in amortization can follow different requirements. Our renewal tool offers a conditional assessment, not an eligibility decision.
Educational estimate only. Not mortgage advice or a lending decision.