What the stress test is
The stress test is a rule that federally regulated lenders, which includes all banks, must prove you could still afford your mortgage if rates rose. Instead of qualifying you at the rate you'll actually pay, they qualify you at the minimum qualifying rate, which is the greater of:
- your contract rate plus 2 percentage points, or
- 5.25%.
The rule for uninsured mortgages comes from OSFI, the federal banking regulator, in its Guideline B-20. Insured mortgages, those with less than 20% down, follow the same qualifying rate under federal mortgage insurance rules. As of October 2026, OSFI has kept the stress test in place, most recently reaffirming its approach in early 2026.
Decoder ring: you don't pay the stress test rate
The qualifying rate is used only to decide how much you can borrow. Your actual payments are based on your contract rate. The stress test changes the size of your approval, not the size of your payment.
How it shrinks what you can borrow
Lenders check that your housing costs and total debts fit within set shares of your gross income:
- Gross debt service (GDS): mortgage payment at the qualifying rate, plus property tax, heating, and half of any condo fees, as a share of gross income.
- Total debt service (TDS): everything in GDS, plus car loans, credit card minimums, lines of credit and other debt payments.
For insured mortgages, the maximums are 39% GDS and 44% TDS. Lenders set their own limits for uninsured mortgages, often similar.
Worked example: $500,000 mortgage, 25-year amortization
Your contract rate is 4.50%, so you qualify at 6.50%. Property tax is $500 a month and heating $100.
- Actual payment at 4.50%: $2,767 a month
- Qualifying payment at 6.50%: $3,349 a month
- Income needed at a 39% GDS using the actual rate: about $103,600
- Income needed at a 39% GDS using the qualifying rate: about $121,500
The stress test raises the income needed for this mortgage by roughly $18,000 a year. Put the other way, at a fixed income it lowers the mortgage you can qualify for by roughly 17% in this example.
If your contract rate is low, the 5.25% floor takes over. At a 3.00% contract rate, 3 + 2 = 5%, which is below the floor, so you qualify at 5.25%.
When the stress test doesn't apply
Straight switches at renewal
Since November 21, 2024, if you move your mortgage to a new lender at renewal without increasing the balance or extending the amortization, a federally regulated lender doesn't need to apply the minimum qualifying rate. The federal government extended the same treatment to insured mortgages. You still have to qualify, but at your actual contract rate. Our renewal guide explains how to use this.
Renewing with your current lender
Renewing with the same lender has never required re-qualifying under the stress test.
Some credit unions and private lenders
Provincially regulated credit unions aren't directly bound by OSFI's guideline, though many apply similar rules. Private lenders set their own criteria, typically at much higher rates and fees. A broker can tell you which lenders qualify borrowers differently, and what that costs.
Loan-to-income limits: the other limit
Since 2025, OSFI has also limited how much of each bank's new uninsured mortgage lending can go to borrowers owing more than 4.5 times their income. These limits apply to a lender's whole portfolio, not to each borrower, so you won't see them as a hard cut-off. But if your loan is a large multiple of your income, you may find fewer lenders willing to approve it.
How to improve your odds
- Pay down other debts before you apply. Every dollar of monthly debt payment removed from TDS goes further than the same dollar of income.
- Close unused credit. Some lenders count a notional payment on unused lines of credit and card limits.
- Add a co-borrower whose income counts toward qualifying.
- Extend the amortization, if you're eligible. First-time buyers and buyers of newly built homes can get a 30-year insured amortization. See down payment and insurance rules.
- Run your own stress test. Use the payment calculator at your contract rate plus 2% to see the payment the lender will use.
Rules can change. For the current version, check OSFI's Guideline B-20 and the Financial Consumer Agency of Canada's guidance on qualifying for a mortgage.