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Do you pass the mortgage stress test — and do you even owe it?
The rate you are qualified at, the payment your lender tests instead of the one you would make, the income two ratio bands ask for — and whether the rule reaches your renewal or your switch at all.
The mortgage
The home's running costs
Other debts
Lenders count 3% of the balance each month, not the minimum payment shown on your statement.
Counted as a payment amortized over 25 years at the qualifying rate, on the full limit — not the interest-only minimum, and not just the drawn portion.
Car loans and leases, student loans in repayment, and any child or spousal support you pay.
Counted toward your total debt (TDS)$500.00
What a lender would test
- Qualifying (stress-test) rate
- 6.50%
- Estimated payment at your rate (4.50%)
- $2,767.36
- Payment used to qualify (6.50%)
- $3,349.12
- The difference
- $581.76
- Other housing costs the ratios count
- $500.00
You would pay the lower figure. The higher one is only the test your lender applies.
Income needed to pass
- 39% / 44% — the insured standard
- $118,612.36
- Tighter ratio
- Total debt (TDS)
On the lower debt-service limits (35% / 42%) — which insurers and lenders conventionally apply to files with a weaker credit history — the same figures give $131,969.83. Which pair applies to you is their call, not a fixed rule.
One rate, two ratios, and a payment nobody makes
Qualifying is not the same as affording. A lender takes the rate you were offered, adds 2 percentage points, compares that against a floor of 5.25% and keeps whichever is higher. Then it works out what your mortgage would cost per month at that rate — a payment you will never make — and checks that figure against your income.
- The rate: your rate plus 2 points, or 5.25%, whichever is higher
- For an uninsured mortgage this is OSFI's expectation of federally regulated lenders under Guideline B-20. For an insured one the same arithmetic arrives through the federal Department of Finance and the insurers' own rules instead — two separate instruments that have agreed on the floor since 1 June 2021, and could stop agreeing. Provincial credit unions, caisses, monolines and private lenders are outside B-20 entirely and set their own qualifying rule.
- The ratios: 39% of income for housing, 44% for everything
- Gross debt service counts the tested payment plus property tax, heat and half of any condo fee. Total debt service adds every other monthly debt payment. These are the mortgage insurers' maximums; B-20 prescribes no ratio at all, so on an uninsured mortgage each lender sets and states its own and yours may be tighter. The insurers publish the lower pair for files with a weaker credit history, which is why the result shows both.
- What counts is not what you actually pay
- A credit card is serviced at 3% of the balance, however small the statement minimum is. A secured line of credit is serviced as though the whole authorized limit were drawn and amortizing over 25 years — at the qualifying rate, not your rate — whether you have drawn a dollar of it or not. A borrower who enters what leaves their account each month understates their own test every time.
Banks and other federally regulated lenders qualify you at the greater of your rate + 2% and 5.25%, so you can still afford payments if rates rise. Insured mortgages use the same rate. Provincial credit unions and private lenders set their own qualifying rule.
What the test asks for, on a $500,000.00 mortgage
At 4.50% over 25 years the payment is $2,767.36. That is not the figure a lender runs the ratios on: it runs $3,349.12, the payment the same mortgage would carry at the qualifying rate of 6.50%. With $4,200.00 of property tax a year, $150.00 a month of heating and $500.00 a month of other debt, here is what each of those asks of a household's income.
- Payment at your own rate
- $2,767.36
- Payment the ratios are run on
- $3,349.12
- Income needed at your own rate
- $102,746.18
- Income needed to pass
- $118,612.36
- Income needed on the lower band
- $131,969.83
- What the test itself adds
- $15,866.18
The last line is the test rather than the mortgage: $15,866.18 of income asked for on account of a payment nobody makes. That is the price of proving you could still carry this mortgage 2 points higher than you agreed to — which is what the rule is for, and is worth seeing separately from the cost of the house.
Whether the test applies to you at all
Since November 2024 OSFI no longer prescribes the stress test on a straight switch at renewal. That is narrower than it is usually reported. The exemption covers an uninsured mortgage moving from one federally regulated lender to another, on the same balance — plus up to $3,000.00 to cover the transaction costs — and the same or a shorter amortization. Every verdict below is produced by the same code the app runs on a real renewal, not written out by hand.
| The move | Stress test | Qualify at |
|---|---|---|
| Renewing with your current lender, same balance | Not required | — |
| Moving an uninsured mortgage from one bank to another | Not required | — |
| Moving an uninsured mortgage from a credit union or caisse to a bank | Applies | 6.50% |
| Moving from a bank to a credit union or caisse | Lender's own rule | — |
| Moving an insured mortgage to a bank | Not required | — |
| Renewing and taking $20,000.00 more than your maturing balance | Applies | 6.50% |
The two credit-union rows are the ones most writing on this leaves out. Both are switches; neither is the switch OSFI exempted — one is caught by the rule and the other is outside it, which is not the same as being released by it. And an exemption is not an approval: the receiving lender still underwrites the file.
Your own move
Set these to your situation. The answer is the one the app gives a signed-in borrower comparing real renewal offers — same rule, same wording.
OSFI's straight-switch exemption releases a move between two federally regulated lenders. A credit union or a monoline is outside that rule and sets its own qualifying test, so this answer changes what the comparison can tell you.
What applies to you
Not required
No prescribed qualifying rate for this move: the same balance — give or take $3,000 of switch costs — on the same amortization, either between two federally regulated lenders or on an insured mortgage. Your new lender still underwrites the file and may apply its own rule.
How this is worked out
- OSFI Guideline B-20, Principle 3 — residential mortgage underwriting at federally regulated lenders, and the source of the qualifying rate on an uninsured mortgage.
- OSFI's straight-switch exemption, effective 21 November 2024, and the $3,000.00 it allows for transaction costs.
- The Department of Finance Canada and the mortgage insurers, who set the qualifying rule on an insured mortgage — a separate instrument, which has agreed with OSFI on the 5.25% floor since 1 June 2021.
- Gross and total debt service maximums as published by the mortgage insurers. B-20 prescribes none: each federally regulated lender sets and states its own.
- Payments use Canadian semi-annual compounding, the convention for fixed and variable mortgages alike.
Method last reviewed 25 August 2026.
Written by Hermann Gael Nang-SongFounder of LoonieLodge Inc., and author of the Canadian mortgage engine this site runs on.
Educational and informational only — not licensed mortgage, financial, legal or tax advice. Every lender's contract governs its own mortgage, and the figures here are estimates from stated assumptions rather than quotes. Confirm anything you intend to act on with your lender and a licensed professional.
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The qualifying rate follows your rate
Your qualifying rate moves every time your contract rate does, and whether you owe the test changes with what you are asking your next lender for. An account works it out against the mortgage you actually hold — including, at renewal, which of the offers on your table would be stress-tested and which would not.