The short answer
The mortgage stress test is a qualifying rule, not an interest rate. To be approved, you must show you could still afford your payments at a higher rate than the one you will actually pay. For mortgages at federally regulated lenders, that qualifying rate is the greater of your contract rate plus 2 percentage points, or 5.25%. You still pay your actual contract rate; the higher rate is only used to check affordability.
Who sets the rule
- Uninsured mortgages (usually 20% or more down): the Office of the Superintendent of Financial Institutions (OSFI) sets the minimum qualifying rate in Guideline B-20 for federally regulated lenders such as banks. OSFI reviews it at least once a year.
- Insured mortgages (less than 20% down, with mortgage default insurance): the federal government's mortgage insurance rules use the same test, the greater of the contract rate plus 2 points or 5.25%.
- Credit unions and private lenders: Ontario credit unions are provincially regulated and are not bound by B-20, though many apply a similar test. Private lenders set their own criteria and usually focus on equity. Different rules do not always mean better terms, so compare total cost.
How lenders use the qualifying rate
Lenders calculate your payment at the qualifying rate and compare it with your income using two ratios:
| Ratio | What it includes | Common limit on insured mortgages |
|---|---|---|
| Gross debt service (GDS) | Mortgage payment, property tax, heating, and half of any condo fees, as a share of gross income | Up to 39% |
| Total debt service (TDS) | Everything in GDS plus other debt payments such as car loans, lines of credit and credit cards | Up to 44% |
These are the mortgage insurers' typical maximums. Uninsured lenders set their own limits, and both can require stronger ratios for some files. Your credit score, the property and your documents still matter.
When the stress test does not apply
- Renewing with your current lender. A renewal with the same lender does not require you to requalify under the test.
- Straight switches at renewal. Since November 21, 2024, OSFI no longer expects the minimum qualifying rate on uninsured straight switches between federally regulated lenders, as long as the loan amount and amortization do not increase. Since December 16, 2024, federal insurance rules also allow low-ratio switches without the qualifying rate when the criteria are met, and insured mortgages could already switch at renewal without being retested. The new lender still reviews your application.
Adding money, extending the amortization or adding a borrower usually turns a switch into a new mortgage or refinance, and the stress test applies again.
Other limits that sit alongside the test
OSFI also applies loan-to-income limits to federally regulated lenders. These cap how much of a lender's new uninsured lending can go to borrowers whose loans are more than 4.5 times their income. It is a portfolio limit on the lender, not a personal cap on you, but it can affect how flexible a particular lender is on large loans relative to income.
Ways to improve your qualifying position
- Pay down or close revolving debt before you apply. Lenders count a payment on credit card and line of credit balances.
- Add a co-borrower whose income and credit help the file.
- A longer amortization lowers the payment used in the calculation. Insured mortgages allow up to 30 years for first-time buyers and buyers of new builds; otherwise insured mortgages are limited to 25 years.
- For self-employed income, organized tax returns and notices of assessment open more lender options.
- Compare lenders. The qualifying rate is set by rule, but how each lender treats your income, debts and the property differs.
Sources
- OSFI: Minimum qualifying rate for uninsured mortgages
- OSFI: Backgrounder on the MQR and straight switches (Nov 21, 2024)
- Finance Canada: Straight switches and portfolio insurance (Dec 2024)
- Finance Canada: Mortgage reforms in force Dec 15, 2024
Rules checked against the sources above on October 26, 2026. Government rules change, so confirm the current version before you rely on a number.