Mortgage stress test.

What the qualifying rate actually is

OSFI publishes the number in one sentence: the minimum qualifying rate for uninsured mortgages is “the greater of the mortgage contract rate plus 2% or 5.25%.” The 2% is called the buffer and the 5.25% is called the floor, and OSFI reviews both at least annually.

The floor only bites when rates are low. At a contract rate of 4.29% you qualify at 6.29%, because that beats 5.25%. At a contract rate of 3.00% you qualify at 5.25%, because 5.00% does not. Below about 3.25% the floor is what is testing you; above it, the buffer is.

Insured mortgages — anything with less than 20% down — face the identical test, but it comes from a different place. It is an eligibility condition for mortgage default insurance set by the Department of Finance and applied by CMHC, whose own criteria state that “GDS & TDS Ratios must be calculated using an interest rate that is the greater of the contract interest rate plus 2%, or 5.25%.”

The two ratios that decide it

The qualifying rate is only the first half. CMHC restricts debt service ratios to 39% (GDS) and 44% (TDS), and those are the numbers this calculator applies.

• GDS = principal + interest + property taxes + heat, divided by gross income. If the property is a condominium, 50% of the condo fee is added. For a leasehold or chattel loan, 100% of the site or ground rent is added.
• TDS = all of the above, plus every other debt obligation: car loans, student loans, support payments, and lines of credit.

Two details that most calculators get wrong, both of which matter by hundreds of dollars a month:

• The principal and interest figure in the ratios is computed on the loan including the capitalised insurance premium, not on the amount you borrowed before it. This tool does that.
• For an unsecured line of credit or a credit card, the monthly obligation counted is no less than 3% of the outstanding balance, whatever your actual minimum payment is. For a secured line of credit it is a payment amortised over 25 years at the contract rate. So a $20,000 credit card balance costs you $600 a month of borrowing room even if you never pay more than the minimum.

Who the test binds, and who it does not

OSFI regulates federally regulated financial institutions: banks, federal trust and loan companies, foreign bank branches and insurers. Guideline B-20 is addressed to them, and OSFI says it “obliges federally-regulated lenders to apply this stress test to their borrowers.”

Provincially incorporated credit unions sit outside that mandate. The Financial Consumer Agency of Canada puts the practical position carefully, and so should you: “Federally regulated entities, like banks, require that you pass a stress test to get a mortgage. Lenders that aren’t federally regulated may also ask you to pass a stress test.” Many provincial credit unions apply an equivalent test as a matter of policy or under their own provincial regulator’s rules, so treat “credit unions do not stress test” as folklore rather than a plan.

One case where the regulator is irrelevant: if the mortgage is insured, the qualifying rate is a condition of the insurance. Any lender writing an insured mortgage is applying it.

Renewals and switches: when the test does not apply

This changed in late 2024 and a lot of advice has not caught up.

• Renewing with your existing lender: B-20 states that lenders “are not expected to re-apply the qualification rate assessment to existing borrowers that are renewing mortgages.” This has always been the position.
• Switching lenders on renewal — uninsured: since 21 November 2024 OSFI no longer expects the MQR to be applied to an uninsured “straight switch”: moving to a new federally regulated lender with no increase to the amortization period, nor the loan amount. Before that change, shopping your renewal could fail a test your existing lender was not allowed to make you take, which effectively locked borrowers in.
• Switching lenders on renewal — low-ratio insured: the Department of Finance removed the MQR requirement for qualifying straight switches on low-ratio (up to 80% loan-to-value) insured mortgages for applications submitted on or after 16 December 2024.

The test still applies in full to a new purchase, and to any refinance or increase in the loan amount.

Down payment, price cap and amortization

Three rules changed on 15 December 2024 and they interact with the stress test, because they decide whether you are insured and over how many years the qualifying payment is spread.

• Minimum down payment: 5% of the first $500,000, 10% of the portion from $500,000 to $1.5 million, and 20% at $1.5 million or more.
• Insurable price cap: CMHC requires the purchase price to be below $1,500,000. At exactly $1.5 million a mortgage cannot be insured, so 20% down is mandatory.
• Amortization: an insured mortgage is capped at 25 years, extended to 30 years where at least one borrower is a first-time buyer or the property is newly built and not previously occupied. With 20% or more down the lender sets the maximum.

A longer amortization lowers the qualifying payment and therefore helps you pass — which is exactly why it costs more. CMHC charges a 0.20% surcharge on the premium for an amortization beyond 25 years.

What the insurance premium costs

The premium is a percentage of the loan, not of the price, and it is normally added to the mortgage. CMHC’s standard homeowner rates for a 25-year amortization run 0.60% up to 65% loan-to-value, 1.70% to 75%, 2.40% to 80%, 2.80% to 85%, 3.10% to 90% and 4.00% to 95%. On the 30-year first-time-buyer and new-build path the high-ratio rates are 3.00%, 3.30% and 4.20% for the same top three bands.

One cost that cannot be financed: Ontario, Quebec and Saskatchewan charge provincial sales tax on the premium, and CMHC states the sales tax cannot be added to the loan amount. In Ontario that is 8% of the premium, payable in cash on closing, which on a $600,000 mortgage at 3.10% is about $1,488 you have to find on the day.

How to pass a test you are currently failing

The calculator shows the largest loan your ratios allow, so the gap between that and what you need is the size of the problem. In rough order of effectiveness:

1. Clear revolving credit. Because an unsecured balance is counted at 3% a month, paying off $15,000 of credit card debt frees $450 of monthly room — worth roughly $75,000 of borrowing at a 6.3% qualifying rate over 25 years.
2. Increase the down payment. Crossing 20% removes the insurance premium from the loan entirely, which shrinks the payment the ratios are tested against.
3. Extend the amortization, if you are eligible for 30 years. It lowers the qualifying payment, at the cost of a 0.20% premium surcharge and considerably more interest.
4. Add a qualified co-borrower, which raises the income side of both ratios.
5. Shop the contract rate. Every 0.25% off the contract rate takes 0.25% off the qualifying rate too, as long as you are above the 5.25% floor.

Sources, and when they were last checked

Every rate, threshold and rebate above was read off the official page listed here on 2 September 2026. Rates change with provincial budgets; if you are reading this long after that date, open the source and check the number before you rely on it.

• Minimum qualifying rate for uninsured mortgages — OSFI — buffer 2%, floor 5.25%; modified 29 January 2026
• Guideline B-20, Residential Mortgage Underwriting — OSFI — addressed to federally regulated institutions; renewals not re-tested
• OSFI exempts uninsured mortgage straight switches from the prescribed MQR — effective 21 November 2024
• Calculating GDS and TDS — CMHC — ratios capped at 39% and 44%; 50% of condo fees; 3% of revolving balances
• Mortgage loan insurance premiums — CMHC — premium table and the 0.20% extended amortization surcharge
• Down payment — Financial Consumer Agency of Canada — 5/10/20% tiers and the $1.5 million threshold; modified 15 October 2025
• Preparing for a mortgage — Financial Consumer Agency of Canada — the stress test applies to insured and uninsured mortgages alike

Last verified 2 September 2026