Qualifying
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.
Stress test is the everyday name for the minimum qualifying rate in OSFI Guideline B-20. Lenders must qualify you at the greater of your contract rate plus 2 percentage points or 5.25%.
It's there for renewal risk. A household borrowing today should still be able to carry the mortgage in 5 years if rates are much higher by then. Anyone who signed in 2021 and renewed in 2026 saw why.
It applies to purchases, refinances and any increase in the balance. It doesn't apply to a straight renewal with your current lender, or, since November 2024, to an uninsured straight switch.
It costs roughly 18 to 20% of purchasing power. The fastest ways to win some back are paying off monthly debts and closing unused credit limits, since both feed straight into your total debt service ratio.
Related terms
Qualifying rate
The rate lenders test you at: the greater of your contract rate plus 2 percentage points, or 5.25%.
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.
Sharp rates. The full picture.
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