Qualifying
Qualifying rate
The rate lenders test you at: the greater of your contract rate plus 2 percentage points, or 5.25%.
Also called minimum qualifying rate, MQR.
Lenders don't approve you at the rate you'll pay. Under OSFI Guideline B-20, they qualify you at the greater of your contract rate plus 2 percentage points or 5.25%. At a 4.09% contract rate, that's 6.09%.
It reduces your purchasing power by roughly 18 to 20% compared with qualifying at your contract rate. On most Canadian purchase files, it's the biggest limit on how much you can borrow.
It doesn't apply when you renew with your current lender. Since November 2024, it also doesn't apply to an uninsured straight switch to a new lender, as long as the balance and the remaining amortization don't change.
Provincially regulated credit unions, including Alberta's, aren't bound by Guideline B-20 and set their own qualifying policies.
Related terms
Stress test
The rule that lenders qualify you at about 2 percentage points above your contract rate, to confirm you could still carry the mortgage.
Gross debt service ratio (GDS)
Your housing costs as a share of your gross income (mortgage payment, property taxes, heat and half the condo fee). The insured guideline is 39%.
Total debt service ratio (TDS)
All your monthly debt payments as a share of gross income, including housing. The insured guideline is 44%.
This definition describes how the term is used in Canadian residential mortgage lending. It’s general information, not advice on your file. Rules, thresholds and rates change. Where a figure is quoted, it’s current as of the date shown on the related guide.
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