Guide · Financing

Mortgage stress test: what rate are you qualified at?

The rule that decides how much you can borrow, even if your real rate is lower. Today’s rate, when the test applies, and what it changes.

By Grégory Payotte, Founder of Payotte · Published

In short

The stress test requires the lender to check that you could pay your mortgage at a higher rate than your contract rate: the greater of 5.25% or your negotiated rate plus 2 points. It applies to insured and uninsured mortgages, to a new loan, a refinance and a home equity line of credit. With the average 5-year fixed rate published by the Bank of Canada (4.49%), that gives a qualifying rate of 6.49%. Switching lenders at renewal, with no increase in the amount, has been exempt since 2024.

6.49%
qualifying rate at the Bank of Canada average 5-year fixed rate (4.49%) plus 2 points
Bank of Canada · 2026-07-01
5.25%
the floor rate, in effect since June 1, 2021
OSFI
39% / 44%
the maximum debt ratios (GDS / TDS) calculated at that rate for an insured mortgage
CMHC

The rule, word for word

For uninsured mortgages, OSFI sets the minimum qualifying rate at “the greater of the mortgage contract rate plus 2% or 5.25%”. FCAC specifies that banks apply the same rule to insured and uninsured mortgages: the higher of 5.25% or the negotiated rate plus 2%. OSFI reviews this rate at least once a year; the current rule has been in place since June 1, 2021 and OSFI’s page was updated on January 29, 2026.

In practice, if your lender offers you 4.50%, it checks your capacity at 6.50%; if you are offered 3%, it checks at 5.25%, the floor. The test does not change your real rate or your real payment: it changes the maximum amount the lender agrees to lend you.

What the test changes, in numbers

The lender then compares the qualifying payment, with your taxes, heating and other debts, to your gross income: for an insured mortgage, CMHC caps housing costs at 39% (GDS) and total debt at 44% (TDS). The affordability guide runs that calculation for your income, and the income needed guide runs it for 65 cities.

Real payment and qualifying payment, 25-year amortization
LoanPayment at 4.49%Qualifying payment at 6.49%Monthly gap
$300,000$1,659$2,008+$349
$400,000$2,212$2,677+$465
$500,000$2,765$3,346+$582

Payotte calculation: principal and interest only, rate compounded semi-annually, monthly payments. 4.49% = average 5-year-and-over fixed rate published by the Bank of Canada (uninsured loans, observed 2026-07-01), a market benchmark, not an offer.

When the test applies

The stress test by situation
SituationStress testSource
New mortgage, insured or notYesFCAC, OSFI
RefinanceYesFCAC
Home equity line of creditYesFCAC
Switching lenders at renewal, uninsured, from one federal lender to another, same amount and amortizationNot prescribed since Nov. 21, 2024OSFI
Switching lenders at renewal, insured mortgageNo requalification required under the regulationsFinance Canada
Lender that is not federally regulatedMay also require itFCAC

The switching lenders guide details the straight-switch conditions.

And the loan-to-income limit?

Since 2025, OSFI also asks each institution to limit the volume of its new uninsured loans above 4.5 times income. It is not a limit on each borrower: it is a cap on the lender’s whole portfolio, on top of the stress test, not instead of it.

Frequently asked questions

What is the mortgage stress test?

It is the check required by regulation: the lender must make sure you could pay your mortgage at the greater of 5.25% or your negotiated rate plus 2 points.

What rate will I be qualified at?

At your negotiated rate plus 2 points, or at 5.25% if that result is lower. At the Bank of Canada average 5-year fixed rate (4.49%), that is 6.49%.

Does the test apply when I switch lenders at renewal?

No if your uninsured mortgage moves from one federal lender to another with no increase in the amount or the amortization (since November 21, 2024), nor for an insured mortgage. Yes if you add money or extend the amortization.

Do credit unions and non-federal lenders apply the test?

OSFI’s rules cover federally regulated institutions. According to FCAC, lenders that are not federally regulated may also ask you to pass a stress test.

Sources

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Updated

General information, not financial advice. For your situation, consult a mortgage broker or your institution.