The mortgage stress test, explained

Canada's mortgage stress test asks whether the payment would still fit if the rate were higher than the one on your offer. The higher rate is used only to calculate the payment that goes into your debt ratios. The payment you actually make is the contract rate. FCAC tells borrowers that federally regulated lenders qualify them at the higher of 5.25% and the contract rate plus 2 percentage points, for insured and uninsured mortgages. A lender that is not federally regulated may use a similar test. It does not have to.

The test is aimed at a shock: a lower income, a higher bill, or a higher rate at renewal. It is not the Bank of Canada overnight rate. Prime moves when that rate moves. The 5.25% floor does not. OSFI sets the uninsured test for federally regulated lenders and reviews the buffer and the floor at least annually. The Minister of Finance sets the insured rule. FCAC's public guidance currently states the same greater-of test for both. In the reported-rate file dated October 18, 2026, the rounded 5-year fixed median is 4.35% (N = 40) and the rounded 5-year variable median is 3.55% (N = 129), insured status not stated. Those figures are self-reported by Canadian borrowers online. See real mortgage rates.

The qualifying rate is the greater of the two numbers. The floor binds only when the contract rate plus 2 points is still below 5.25%, which means a contract rate under 3.25%. At the rounded reported 5-year fixed median of 4.35%, the qualifying rate is 4.35% + 2 = 6.35%. The floor does nothing in that file. At the rounded reported 5-year variable median of 3.55%, the qualifying rate is 5.55%, which is also above the floor. A contract at 2.99% qualifies at 5.25%, because 4.99% loses to the floor. In 2026, with reported five-year rates in the file above that line, most new fixed and variable contracts are qualified on contract-plus-two, not on 5.25%.

The stress test qualifier on this site uses that same greater-of rule and a 5.25% floor. Payments in the examples below use the site's formula, annual rate divided by 12, which is what the mortgage calculator uses. A lender disclosure usually compounds semi-annually, so the payment can differ by a few dollars. Ratios are the point of the example.

Two ratios do the rest of the work. Gross debt service (GDS) is housing cost divided by gross income. Total debt service (TDS) adds the other debts. CMHC's homeowner insurance requirements cap GDS at 39% of gross household income and TDS at 44%. Housing cost for that test is principal and interest at the qualifying rate, property tax, heat, any site lease, and 50% of condominium fees. CMHC's GDS and TDS note says the same 39 and 44, and it says the payment includes the insurance premium in the loan. Heat should be the real bill when you have one, and a reasonable estimate when you do not.

FCAC uses 39% and 44% as the figures to stay under, and notes a lender may still approve a file slightly over. On an uninsured bank mortgage, OSFI requires the qualifying rate. It does not publish 39 and 44 as a universal cap. The bank's own policy is the cap. The qualifier on this site counts the full condominium fee, not the half CMHC counts, so a condo can look slightly harder on the tool. Child support, a car lease, a student loan, and a credit-card minimum count as debt. A line of credit is counted at the required payment.

One mortgage, three households. Price is already decided: a $600,000 loan, 25-year amortization, no condo fee. Contract rate 4.35%, the rounded reported 5-year fixed median, used here as the offer. Qualifying rate 6.35%. Property tax $350 a month. Heat $150 a month. Other debts $450 a month, a car payment in this story. The qualifying payment is $3,995. The payment you would actually make, at 4.35%, is $3,284. The test ignores that second number.

At $85,000 a year ($7,083 a month), GDS is 63.5% and TDS is 69.8%. The file misses those ceilings. The contract payment is not the payment the test uses. TDS is the tighter cap: about $2,167 a month of room, or a mortgage near $325,392 at 6.35% over 25 years with this tax and heat.

At $130,000 a year ($10,833 a month), GDS is 41.5% and TDS is 45.6%. The file misses those ceilings. The contract payment is not the payment the test uses. GDS is the tighter cap: about $3,725 a month of room, or a mortgage near $559,423 at 6.35% over 25 years with this tax and heat.

At $190,000 a year ($15,833 a month), GDS is 28.4% and TDS is 31.2%. Both ratios clear the 39% and 44% ceilings in this illustration. GDS is the tighter cap: about $5,675 a month of room, or a mortgage near $852,276 at 6.35% over 25 years with this tax and heat.

The household at $130,000 is the instructive one: the contract payment looks manageable, and the qualifying payment still misses the ceilings. The household at $190,000 clears both. A co-borrower's gross income counts when that person is on the application. A raise that has not started does not.

Drop the contract to 2.99% on the $130,000 household and the floor binds. The qualifying rate is 5.25%, not 4.99%. The qualifying payment is $3,595. GDS is 37.8% and TDS is 42.0%. Those ratios clear 39 and 44. A slightly lower contract rate will not rescue a file that fails by a wide margin, because the floor catches the qualifying rate. A larger down payment, a cheaper house, or a smaller car payment will.

Default insurance is what lets a federally regulated lender fund a mortgage with less than 20% down. CMHC requires the purchase price or lending value of a homeowner loan to be below $1,500,000. At $1,500,000 or above, the loan is not insurable and the down payment is at least 20%. Small rental loans stay below $1,000,000 on that same page. The Department of Finance announcement of September 16, 2024 is the decision that raised the insured cap from $1 million to $1.5 million, effective December 15, 2024. The minimum down payment is 5% on the first $500,000 and 10% on the rest.

Worked down payment on a $700,000 home. Five percent of $500,000 is $25,000. Ten percent of the remaining $200,000 is $20,000. Minimum down payment $45,000, which is 6.43% of the price, not 5%. The loan before insurance is $655,000, loan-to-value 93.57%. That sits in CMHC's 90.01% to 95% band. CMHC's premium schedule charges 4.00% of the loan on that band for a traditional down payment, or $26,200. Added to the mortgage, the balance is $681,200. You repay the premium, with interest, over the amortization. Ontario, Quebec, and Saskatchewan charge provincial sales tax on the premium, and CMHC says that tax cannot be added to the loan. A non-traditional down payment, such as borrowed funds, is 4.50% in that same high-ratio band.

Insured 30-year amortizations are for first-time buyers and for buyers of new builds, effective December 15, 2024. That widened an August 1, 2024 rule limited to first-time buyers of new builds. A repeat buyer of a resale home stays at 25 years if the mortgage is insured. CMHC's calculator says the same. An amortization beyond 25 years adds 0.20 points to the premium. On the example, 4.20% is $27,510 and a balance of $682,510. The longer amortization lowers the GDS payment. The surcharge raises the balance. Uninsured mortgages, 20% down or more, are outside this program. Lenders commonly offer 30 years on those files. The stress test still applies to a new uninsured loan at a federally regulated lender.

The CMHC insurance calculator uses those traditional 25-year bands and treats a price of $1,500,000 or more as outside default insurance. It does not add the 0.20 point surcharge or provincial sales tax. The CMHC insurance guide is the longer walk-through. Compare contract rates on the insured and uninsured pages. Closing costs are not in GDS. CMHC suggests planning for about 1.5% to 4% of the price. The closing costs and land transfer tax calculators cover that cash.

A First Home Savings Account can fund the down payment. It does not change the qualifying rate. The CRA describes the FHSA as a registered plan for a first-time buyer. In the year you open your first one, participation room is $8,000. Contributions and transfers from an RRSP share that room. A transfer is not deductible a second time. The lifetime limit is $40,000. Unused room carries forward, and the carryforward is capped so that a later year can be as high as $16,000 if you contributed nothing the year before. Five years of the full $8,000 uses up the lifetime limit. Income inside the account does not consume room. A qualifying withdrawal to buy or build a first home is not taxed and is not repaid.

The Income Tax Act, section 146.6, ends the maximum participation period at the end of the year after the earliest of the 14th anniversary of opening, the year you turn 70, or the first qualifying withdrawal. Check the date in your CRA account. The participation-room page warns that two accounts do not double the $8,000. Forty thousand dollars from an FHSA can change the insurance band or clear 20% down. It does not change the qualifying rate, and it is not income. The Home Buyers' Plan, which Budget 2024 raised to $60,000, has to be repaid. An FHSA qualifying withdrawal does not.

A renewal that stays with your current lender, with the same balance and no longer amortization, is not a new loan. Lenders generally do not run the minimum qualifying rate again. Since November 21, 2024, OSFI also does not require the set minimum qualifying rate on an uninsured straight switch to a different federally regulated lender at renewal, if the loan amount and the amortization do not increase. The backgrounder is explicit. Insured borrowers can switch lenders at renewal without another stress test under the Canadian Mortgage Charter, as the Department of Finance described it in September 2024. The renewal playbook is the page for that process.

The test comes back when you refinance, take a home-equity line of credit, increase the loan, or lengthen the amortization. FCAC lists the refinance and the home-equity line specifically. Paying a break fee by adding it to the new loan is new money. So is rolling a car loan into the mortgage. A purchase is always new underwriting, at the qualifying rate, for a federally regulated lender.

OSFI's guideline binds federally regulated lenders. A provincially regulated credit union is outside it, though an insured file still has to meet the insurer's qualifying rate. A decline at a bank is not a promise that a credit union will skip the buffer. Ask which rate they will use. The lender guide separates the regulators. OSFI's loan-to-income limits constrain a lender's uninsured book. They are not a ratio you calculate at the kitchen table.

Start with the stress test qualifier and the affordability calculator. Use the mortgage calculator for the payment you will actually make, and the CMHC insurance calculator only as a cross-check against the official premium schedule. If the decision is a renewal rather than a purchase, the renewal offer checker and real mortgage rates are the relevant pages, and the stress test often is not. Posted context is on the 5-year fixed and variable pages. The disclaimer applies: a ratio on this site is not an approval.

Rules change. The figures on this page were checked against the public pages below.

• OSFI, minimum qualifying rate and the November 21, 2024 backgrounder.
• FCAC, preparing to get a mortgage. Greater of 5.25% and the contract rate plus 2%.
• CMHC, homeowner requirements and GDS and TDS. Price below $1,500,000. GDS 39%. TDS 44%.
• CMHC, premium schedule. 0.60% to 4.00%, plus 0.20% past 25 years.
• Department of Finance Canada, September 16, 2024. Insured cap, 30-year eligibility, Mortgage Charter.
• CRA, FHSA, participation room, and Income Tax Act section 146.6.
• Bank of Canada, September 2, 2026. The stress-test floor is not the overnight rate.