The 2026 rule: you must qualify at the greater of 5.25% or your contract rate + 2%. We show you the math.
Every federally regulated Canadian lender must qualify you at the greater of 5.25% or your contract rate plus 2%. That qualifying rate is used only to test your debt ratios — you still pay your actual contract rate.
Note that it is the contract rate, not the posted rate, that drives the calculation — a distinction that still trips up borrowers reading pre-2021 advice.
The stress test does not exist on its own. It feeds two debt-service ratios, and you must pass both.
The HELOC rule is the quiet killer: an unused $100,000 HELOC still counts roughly $3,000 a year against your TDS. Reducing or closing unused credit lines before you apply is often worth more borrowing power than a rate discount.
Worked example: household gross income $150,000, no other debt, 20% down, property tax $500/month, heat $100/month, 25-year amortization.
Illustrative and rounded — run your own file in the affordability calculator. The pattern is what matters: the stress test costs roughly 15–20% of buying power, and consumer debt costs as much again.
Staying with your existing lender at renewal is stress-test exempt — no requalification at all. That is exactly why renewal letters arrive with rates above market: the lender knows some borrowers believe they cannot leave.
Since 2024, OSFI has also confirmed that a straight switch — same amortization, same balance, no new money — does not require the borrower to requalify under the minimum qualifying rate at most federally regulated lenders. In practice that means:
If your renewal is within six months, shop it. See switching lenders at renewal for the process.
What does not work: inflating income, hiding debts, or undeclared gifted down payments. All three are caught at underwriting and can void the approval at the worst possible moment.
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The greater of 5.25% or your contract rate plus two per cent. If your contract rate is 4.19%, you qualify at 6.19%. If your contract rate is below 3.25%, the 5.25% floor applies instead.
Yes. Every federally regulated lender applies it to insured and uninsured mortgages alike. The down payment changes your rate tier and your amortization options, not whether the test applies.
No if you stay with your current lender, and generally no on a straight switch to a new lender with the same balance and amortization and no new money. It does apply in full to a refinance where you take out equity or extend the amortization.
Some provincially regulated credit unions set their own qualification rules and will qualify at the contract rate rather than the federal minimum. Not all of them do, and the ones that do may price slightly higher, so it is a fit question rather than a loophole.
Typically fifteen to twenty per cent of maximum mortgage size. On a $150,000 household income with no other debt, it is roughly the difference between $790,000 and $650,000.
Yes. Lenders count about three per cent of your HELOC or credit card limit as a monthly payment, whether or not you carry a balance. Reducing unused limits before applying is one of the cheapest ways to increase approval size.
Thirty-nine per cent GDS and forty-four per cent TDS on insured mortgages. Uninsured files with strong credit can stretch further at some lenders, up to roughly fifty per cent TDS.
B-lenders apply their own qualification standards, often at the contract rate plus a smaller buffer. Private lenders underwrite on property equity and an exit plan rather than debt ratios. Both cost more in rate and fees, so they work best as a one to two year bridge back to A-lender pricing.
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