Mortgages
The Mortgage Stress Test in Canada
What the stress test is, how the qualifying rate is set, how it affects how much you can borrow, and when it doesn’t apply.
What is the mortgage stress test?
It’s a federal rule that makes lenders check you could still afford your mortgage if rates were higher. You qualify at the higher of 5.25% or your contract rate plus 2 points.
It applies to insured mortgages (under 20% down) and to uninsured mortgages from federally regulated lenders such as banks. You still pay your actual rate; the test only decides whether you qualify and for how much.
Put it into practiceMortgage affordability calculatorHow much higher is the test payment?
At a 4.5% rate, the test payment is about 21% higher. The table shows a $500,000 mortgage over 25 years.
| Your rate | Stress-test rate | Payment at your rate | Payment at stress-test rate |
|---|---|---|---|
| Top3.5% | 5.5% | $2,496.35 | $3,051.96 |
| 4% | 6% | $2,630.10 | $3,199.03 |
| 4.5% | 6.5% | $2,767.36 | $3,349.12 |
| 5% | 7% | $2,908.02 | $3,502.08 |
How do lenders use the test payment?
They add the test payment to your property tax, heat and half of any condo fees. That total generally shouldn’t exceed 39% of your gross income, and with your other debts it shouldn’t exceed 44%.
These are CMHC’s limits for insured mortgages; lenders set their own limits for uninsured mortgages.
Do I have to pass it again when I renew?
Not if you renew with your current lender. You also don’t need to pass it to switch lenders at renewal if you don’t increase the amount or the amortization.
That applies to uninsured mortgages moving between federally regulated lenders and, under the Canadian Mortgage Charter, to insured mortgages. The new lender can still apply its own approval rules.
How can I improve my chances?
Pay down other debts, save a bigger down payment, add a co-borrower, or choose a longer amortization if you’re eligible.
Paying off a car loan or credit card balance frees up room under the 44% limit. Run your numbers in the affordability calculator first.
Keep reading
MortgagesWhat Credit Score Do You Need for a Mortgage in Canada?For an insured mortgage with less than 20% down, CMHC requires at least one borrower to have a credit score of 600 or more. What lenders look for beyond the score, and what to do if yours is lower.- MortgagesHow Much Mortgage Can I Afford in Canada?Lenders limit housing costs to about 39% of your gross income and all debts to 44%, tested at the stress-test rate. Example maximum mortgages by income, and how debts and down payments change them.
MortgagesDown Payments and CMHC Mortgage Insurance in CanadaThe minimum down payment for any price, what CMHC insurance costs with less than 20% down, and where your down payment can come from.
MortgagesHow Mortgages Work in CanadaWhat a mortgage is, the difference between term and amortization, how payments are calculated and what else you pay when you buy.
Official sources and further reading
- OSFI: Minimum qualifying rate for uninsured mortgages ↗
- Finance Canada: qualifying rate for insured mortgages ↗
- Finance Canada: mortgage reforms in force December 15, 2024 ↗
- CMHC: Requirements for mortgage loan insurance ↗
Terms vary by product. Confirm the provider’s current terms before acting. This guide does not predict approval, realized value or credit-score changes. How WalletReturn calculates value