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You sign for one rate and the lender tests you at a higher one. For most new borrowers the test rate is the greater of your contract rate plus 2 percentage points or 5.25%, and your housing costs must stay under 39% of gross income, with all debts under 44%. On a $100,000 household income, that works out to a price of roughly $498,000 with $100,000 down.
Which rate and ratios decide whether you pass?
CMHC says the debt ratios are calculated with the greater of the contract rate plus 2% or 5.25%, with a gross debt service (GDS) limit of 39% and a total debt service (TDS) limit of 44%. The CMHC: purchase insurance page lists both. For uninsured mortgages at federally regulated lenders, the Office of the Superintendent of Financial Institutions: minimum qualifying rate sets the same rate formula. OSFI’s page was last updated on 29 January 2026, it reviews the rate at least once a year, and it was still in force in October 2026.
GDS is your mortgage payment, property tax and heating, plus often half of any condo fees, divided by gross income. TDS adds your other debt payments: a car loan, a student loan, credit card minimums. You have to clear both. Lenders can set stricter limits of their own.
How much home does each income pass for?
The assumptions are $100,000 down, a 4.99% contract rate (so a 6.99% test rate), a 25-year amortization, $300 a month in other debts, property tax at 0.75% of the price a year and $150 a month for heat. Under those, the maximum price rises with income like this.
| Household income | Highest price that passes | Payment at the test rate |
|---|---|---|
| $60,000 | $321,000 | $1,547 |
| $80,000 | $413,000 | $2,190 |
| $100,000 | $498,000 | $2,785 |
| $120,000 | $571,000 | $3,388 |
| $150,000 | $694,000 | $4,286 |
These are estimates from the site’s mortgage engine, rounded to the nearest thousand. A real lender will also look at your credit history, job stability and the property. The mortgage stress test calculator shows the formula, and the mortgage affordability calculator turns it into a price range.
What lowers your chances of passing?
Monthly debts, high carrying costs and a small down payment do the most damage. Every dollar of debt payment comes straight out of the 44% TDS room, and a big property tax bill or condo fee eats into the 39% GDS room before the mortgage payment is even counted.
- A car payment of $650 instead of $300 drops the $100,000-income example from $498,000 to $467,000. At $1,000 a month it falls to $421,000.
- Income a lender can’t document, such as recent self-employment or commission pay, may be averaged or only partly counted.
- A higher contract rate raises the test rate with it. At a 6.5% contract rate the same household passes for $454,000, against $540,000 at 3.5%.
- Credit cards at their limit hurt even if you clear them monthly, because lenders may count a minimum payment on the balance.
What helps the most?
A bigger down payment, because it shrinks the loan the test runs against. On the $100,000 income, $50,000 down passes for $441,000, $100,000 down for $498,000, $150,000 down for $544,000, and $200,000 down for $590,000. Each extra $50,000 of down payment adds between $46,000 and $57,000 of price.
Clearing a debt helps when TDS is what’s holding you back. In the table above the household with $300 of debts hits the 39% GDS ceiling first, so paying off that $300 changes nothing. A $1,000 payment is different: it holds the price at $421,000, and clearing it takes you back to $498,000. Other levers are a co-borrower with their own income, a lower contract rate (shop around before you apply), and a 30-year amortization if you’re a first-time buyer or buying a new build, which lowers the test payment. The mortgage terms article explains who qualifies for 30 years.
Is the test different for insured and uninsured mortgages?
The test rate formula is the same, and most other rules differ. On an insured mortgage (under 20% down), CMHC sets the 39% and 44% limits, asks for a credit score of at least 600 for one borrower, and adds a premium to the loan, which raises the payment being tested. On an uninsured mortgage the lender sets its own ratio limits within OSFI’s guideline, and some will stretch higher for strong credit and a large down payment.
Provincially regulated lenders and some credit unions fall outside OSFI’s guideline, though many follow something close to it. If a bank turns you down, an application elsewhere is worth the effort. Check the product and the rate carefully before you sign.
Should you buy at the very top of what passes?
Passing means a lender will approve the loan. Whether the payment fits your life is a separate matter. In the $100,000 example, the real payment on a $398,000 loan at the 4.99% contract rate is about $2,313 a month, before property tax and heat, and before child care, commuting or any saving. Many buyers aim a notch below the limit and keep cash in reserve, since closing costs come out of the same savings as the down payment.
Do you have to pass the test again at renewal?
Usually not, if you stay with your lender or make a straight switch of the same balance to a new one. As I read OSFI’s guidance, lenders aren’t expected to re-run the qualifying rate test for uninsured borrowers switching at renewal. You may still face it if you borrow more, change the amortization or refinance. The mortgage renewal calculator shows how a new rate changes your payment, and the closing costs checklist helps you budget the cash side.
Where does this information come from?
The qualifying rate and the 39% and 44% limits come from CMHC and OSFI (checked October 2026); the maximum prices are estimates from the site’s mortgage engine under the assumptions stated. Checked in October 2026. This is an independent information site: we provide no services, we do not represent the CRA or any organization, and we do not guarantee that anything here is accurate or current. We accept no liability for decisions based on it. Check the official source before you rely on it. See the full disclaimer.
Frequently asked questions
Is the stress test the same for every lender?
The rate formula is the same, but lenders pick their own ratio limits and use their own judgment. CMHC-insured mortgages use 39% GDS and 44% TDS. Credit unions and other provincially regulated lenders may follow their own rules, so a no from one lender isn't final.
How much does the stress test cut what I can borrow?
On a $500,000 mortgage over 25 years, the payment is $2,905 at a 4.99% contract rate and $3,499 at the 6.99% test rate. That's $594 a month more that your income has to cover on paper, though you only pay the first figure.
Does the 5.25% floor ever apply?
Yes, whenever your contract rate is under 3.25%, because 3.25% plus 2% is 5.25%. At a 3% contract rate your test rate is 5.25%, since 3% plus 2% is only 5%. OSFI publishes the same formula and reviews it at least once a year.
Does the test count my rent or my savings?
No. The test only looks at the housing costs and debts you'll carry after closing, set against gross income. Savings matter indirectly, since they fund a bigger down payment, and lenders also want to see cash for closing costs.
What can I do if I fail by a small amount?
Ask the lender for the ratios it calculated. Paying off one debt, adding a co-borrower or putting down a little more can close a small gap. Waiting for a raise, or choosing a cheaper home with lower property tax, also works.