On a $500,000 mortgage with a contract rate of 4.99%, the stress test rate is 6.99% and the qualifying payment is $3,498.99 a month. That payment needs about $122,533 of household income. Enter your loan, rate, income and costs and the result tells you if you pass.
What rate does the stress test use?
The test asks a plain question: could you still pay if rates went up? The qualifying rate is the higher of your contract rate plus 2 percentage points and 5.25%. That 5.25% floor comes from the federal regulator’s guideline as posted in January 2026. You still pay at the contract rate. The higher rate only decides if your income is enough, so a higher qualifying rate makes the bar higher without making your actual payment any bigger than the contract says.
| Contract rate | Qualifying rate | Why |
|---|---|---|
| 2.99% | 5.25% | Floor applies, since 4.99% is lower |
| 3.25% | 5.25% | Both routes give 5.25% |
| 3.99% | 5.99% | Contract rate plus 2 points |
| 4.99% | 6.99% | Contract rate plus 2 points |
| 5.99% | 7.99% | Contract rate plus 2 points |
Would a $120,000 household pass?
Take a household earning $120,000 that wants a $500,000 mortgage over 25 years at 4.99%. Property tax is $4,000 a year, heating is $150 a month, and there’s $500 a month in other debt. The payment at the contract rate is $2,905.18. At the qualifying rate of 6.99% it jumps to $3,498.99.
The calculator adds housing costs to that payment and divides by the 39% housing limit. Then it does the same with debts against the 44% total limit. Whichever answer is higher is the income you need, and here that’s $122,533. The household is $2,533 short, so the result reads as not passing.
Cut the contract rate to 3% and the qualifying rate drops to the 5.25% floor. The income needed falls to $108,080, and the same household passes. So would a raise to $130,000 at the original rate.
What if you don’t pass?
Three things can help: a smaller loan, more income on the application, or less debt, depending on which limit is the one holding you back. In the example it’s the housing limit, so clearing the $500 debt changes nothing. A $480,000 loan, though, needs only $118,428 and passes. Rerun the tool after each change.
The 39% and 44% ratios here are common figures, and lenders can set their own. Half of any condo fee counts toward housing costs. The tool knows nothing about your credit score, your type of job or a co-signer, so a pass isn’t an approval.
The usual slip is forgetting debts like car loans and card minimums, which push up the income you need. Use a realistic property tax figure too. To turn income into a price range, try the mortgage affordability calculator. For the loan a lender might offer before you start shopping, there’s the mortgage pre-approval calculator. Checking your savings? The down payment calculator shows the minimum for a price, and the mortgage calculator sets the payment itself.
Where do the numbers come from?
We checked the qualifying rule, the greater of the contract rate plus 2% and 5.25%, against the federal regulator’s page in January 2026. The 39% and 44% limits are widely used, but we couldn’t confirm them as an official rule, so they’re labelled as common practice. Amortization choices are 25 and 30 years. Long amortizations can be limited for insured mortgages, so ask a lender which one you can use. This site has no tie to any government body.
Frequently asked questions
Which rate does the stress test use?
The higher of your contract rate plus 2 percentage points and 5.25%. At a 4.99% contract rate that's 6.99%.
Do I actually pay the stress test rate?
No, your payment follows the contract rate. The higher rate only checks that your income could handle it.
Why doesn't a very low contract rate help?
Below 3.25% the 5.25% floor takes over, so the qualifying payment stops falling.
Which income limits does the tool apply?
The common 39% housing and 44% total debt limits. Lenders can set their own.
Does a pass mean I'm approved?
No. The lender also looks at credit, employment and the property, so read a pass as a guide.
Sources and updates
Updated: . How we check rates · Editorial team · Updates
Estimate only. These figures are a planning estimate, not tax, legal or accounting advice. Tax-Services.ca is an independent publisher: we don't prepare or file tax returns, and we don't offer tax, legal or accounting services. We have no connection with the Canada Revenue Agency, Revenu Québec or any provincial government. Your real amounts depend on details this tool cannot see, so confirm them with an official source or a qualified professional before you act.