The stress test is the reason two buyers with the same income can be approved for very different amounts, and the reason your pre-approval is lower than the payment you think you can afford.
The rule in one line
Lenders must check you could make your payments at the greater of your contract rate + 2% or 5.25%. This is OSFI’s minimum qualifying rate, part of guideline B-20, and insured mortgages face the same test.
How it limits your mortgage
At the qualifying rate, your housing costs must stay within 39% of gross income (GDS) and all debts within 44% (TDS). Example: a $600,000 mortgage at 4.49% has an actual payment of about $3,317. At the 6.49% qualifying rate the payment is about $4,013, and that’s the number that must fit your ratios.
Roughly speaking, the stress test cuts borrowing power by about 20% compared with qualifying at your actual rate.
When it applies
- Buying: always, insured or uninsured, at federally regulated lenders.
- Refinancing or increasing your mortgage: yes.
- Renewing with your lender: no.
- Switching lenders at renewal: since November 21, 2024, not for a straight switch of an uninsured mortgage (same balance and amortization).
- Credit unions regulated provincially aren’t bound by B-20, but most apply a similar test.
Ways to pass
- Pay off small debts: every $100 of monthly debt payments costs roughly $15,000 of borrowing power.
- Add a co-borrower or guarantor.
- A longer amortization lowers the qualifying payment (30 years with 20% down, or as a first-time buyer).
- Make a bigger down payment so you need a smaller mortgage.
See exactly where you stand with the stress test calculator or the affordability calculator.