The Mortgage Stress Test: Current State and Future Changes
The stress test has been a key mortgage qualification requirement since 2018.
Current Stress Test Rules (2024-2025)
The Requirement:
You must qualify at the higher of:
- Your contract rate + 2%, OR
- 5.25% (floor rate)
Why the Stress Test Exists
OSFI's Goals:
- Ensure borrowers can handle rate increases
- Reduce systemic risk to banking system
- Prevent over-leveraging in housing market
Impact on Buying Power
- ~20% reduction in maximum purchase price
- More significant in high-rate environments
- Particularly affects first-time buyers
Potential 2026 Changes
Scenarios Being Discussed:
- Reduce the Buffer: Change from +2% to +1.5%
- Lower the Floor: Reduce 5.25% floor to 4.75%
- Remove for Renewals: Currently applies at renewal if switching lenders
- First-Time Buyer Exemptions: Reduced stress test for FTHB
How Borrowers Should Prepare
Focus on What You Control:
- Maximize down payment savings
- Improve credit score
- Reduce existing debt
- Document income thoroughly
- Choose property within comfortable budget
Frequently Asked Questions
When might changes take effect?
OSFI typically announces changes with several months notice. Any 2026 changes would likely be announced mid-2025.
Would changes apply to my current mortgage?
No, stress test only applies at origination and renewal (if switching lenders).
Get pre-approved and understand how stress test rules affect your buying power.
Understand Your Qualification
Get pre-approved and understand how stress test rules affect your buying power
