Co-signers and the mortgage stress test
A co-signer helps you pass the stress test because the lender can add their income to yours, but it will usually count the co-signer's own debts too. A first-time buyer earning $70,000 needs a debt-free co-signer earning about $35,700 to pass at $500,000 with $50,000 down; with $2,500 a month of their own payments, the co-signer needs about $100,100.
How does a parent co-signer change the numbers?
A co-signer helps you pass the stress test because the lender can add their income to yours. Lenders that do usually count the co-signer's own debt payments too, so a co-signer who carries a mortgage or car loan adds much less than their salary suggests. One family, worked through:
The buyer earns $68,000, has $45,000 saved and pays $250 a month on a student loan. Their parent earns $76,000 and still pays $1,600 a month toward their own mortgage and car. Rate 4.12%, the Bank of Canada's August 2026 insured 5-year average, over 25 years.
| Buyer's income and debts | $68,000; $250 a month |
|---|---|
| Co-signer's income and debts | $76,000; $1,600 a monthCounted the way many lenders do: all income, all payments |
| Price and down payment | $460,000, $45,000 down9.8%, so the loan is insured |
| Property tax, heating | 0.8% of price a year, $100 a monthOur planning estimates |
| Qualifying rate | 6.12%4.12% + 2 points |
| Buyer alone: GDS / TDS | 56.5% / 60.9%Fails; the buyer alone passes up to $328,500 |
| With the parent: GDS / TDS | 26.7% / 42.1%Limits 39% / 44%: passes |
| Room left under TDS | $231 a monthAfter the buyer's $250 and the parent's $1,600 of payments |
| Co-signer income this price needs | $69,700 with their debts; $30,500 if debt-free |
| Result | Passes at $460,000; the pair top out at $491,200A debt-free parent on the same income would lift that to $660,200 |
The parent's salary does the heavy lifting on housing costs: GDS falls from 56.5% to 26.7%. Their $1,600 of monthly payments is what limits the pair. TDS lands at 42.1%, and those payments cost $169,000 of buying power compared with a debt-free co-signer on the same income.
This assumes the lender counts all of the co-signer's income and all of their payments. That's common, but it's each lender's own method; ask for it in writing before anyone signs.
Open this example in the calculator →Ratios: Insurable Housing Loan Regulations; co-signer treatment is lender practice (see below).Computed November 1, 2026.
How much income does a co-signer need to add?
Here's a different buyer across a range of incomes: a first-time buyer putting $50,000 down on a $500,000 home at 4.12%, tested at 6.12% over 25 years, with $300 a month of their own debts:
| Buyer's income | Buyer passes alone up to | Co-signer with no debts | Co-signer paying $1,000/month | Co-signer paying $2,500/month |
|---|---|---|---|---|
| $60,000 | $291,400 | $45,700 | $69,200 | $110,100 |
| $70,000 | $340,700 | $35,700 | $59,200 | $100,100 |
| $80,000 | $386,200 | $25,700 | $49,200 | $90,100 |
| $90,000 | $430,500 | $15,700 | $39,200 | $80,100 |
Assumes the lender adds the co-signer's income to yours and their monthly payments to your total debt (TDS), a common approach that each lender sets for itself. Property tax 0.8% of price a year (our estimate), heating $100 a month, insurance premium added to the loan. Computed by our engine.
Two things stand out. Every extra dollar the buyer earns cuts the co-signer's required income by the same dollar, because the lender pools the two. And the co-signer's own payments are expensive: in the $70,000 row, each $1,000 a month they already pay raises the income they need by about $23,500. A parent with their own mortgage, property tax and car payment can easily be in the right-hand column.
The qualifying rate and 39% / 44% limits for insured loans: Source: Justice Laws, Insurable Housing Loan Regulations (SOR/2012-282), ss. 5, 6 and 6(3.1), effective February 27, 2025. Checked .Co-signer, co-borrower or guarantor: what's the difference?
Lenders use these words loosely, so ask which one they mean before anyone signs. In general:
- Co-borrower
- Borrows with you, is usually on title, and their income and debts count fully. Couples buying together are usually co-borrowers.
- Co-signer
- Signs the mortgage and is responsible for the whole debt if you don't pay. Whether they also go on title depends on the lender and the deal.
- Guarantor
- Promises to pay if you don't. Lenders rely on a guarantor's credit and finances in different ways.
- TDS (total debt service)
- Housing costs at the qualifying rate plus every other monthly debt payment, divided by gross monthly income. Insured limit 44%. It's the ratio a co-signer's debts land in.
The federal rules don't settle how a co-signer's or guarantor's income and debts enter GDS and TDS. OSFI's Guideline B-20 says only that a lender should do a "sufficiently rigorous credit assessment" of a guarantor or co-signor, scaled to how much it relies on them, and that the person should fully understand their legal obligations. The insured-mortgage regulations define the ratios using "a borrower's" income and payments. We couldn't find a CMHC or OSFI rule on co-signer income; it's lender practice.
Guideline B-20, Principle 3, on guarantors and co-signors: Source: OSFI, Guideline B-20: Residential mortgage underwriting practices and procedures, effective January 1, 2018. Checked .
What does co-signing cost the co-signer?
A co-signer takes on the whole mortgage, not a share of it. If you miss payments, the lender can collect from them. And because they're legally responsible for the debt, a lender they apply to later for their own mortgage, renewal or line of credit may count your mortgage against them. That can matter more than people expect for a parent planning to downsize, refinance or borrow in the next few years: refinancing and new home equity lines are tested again at the qualifying rate, according to the Financial Consumer Agency of Canada.
The table above shows the other side: their existing payments reduce what they can add for you. If the co-signer still has a mortgage, expect the lender to count it, along with that home's property tax and heating, in their debts.
FCAC: you must pass the stress test again to refinance or take a HELOC: Source: Financial Consumer Agency of Canada, Preparing to get a mortgage: how the stress test impacts your qualification, effective October 15, 2025. Checked .Can a co-signer help with credit or insurance?
Yes, for the credit score rule on insured mortgages. Federal regulations require at least one borrower or guarantor to have a credit score of at least 600 for a mortgage to be insurable. A guarantor with a strong score can meet that requirement if your own file is thin or bruised. Individual lenders can set higher bars.
A co-signer doesn't change the other insured rules: the loan still has to be under the $1,500,000 price cap, meet the minimum down payment, and pass at 6.12% or whatever your qualifying rate is.
CMHC's homeowner criteria: credit score, price cap and amortization: Source: CMHC, Homeowner mortgage loan insurance: Purchase (eligibility). Checked .Can you take a co-signer off the mortgage later?
Usually only by having the lender underwrite you on your own. Removing someone from the loan changes who is borrowing, so treat it like a refinance, which FCAC says means passing the stress test again. A renewal with your current lender isn't retested, but that's for the same loan and the same borrowers. We couldn't find a federal rule specific to removing a co-signer, so ask your lender how it handles it.
Here's what that means for the $70,000 buyer in the table. After a 5-year term at 4.12%, about $404,700 would still be owing with 20 years left. To carry that alone at today's 6.12% qualifying rate, they'd need roughly $102,900 of income (an estimate, assuming rates and costs stay where they are). If their income has grown that far, the lender may agree to take the co-signer off; if not, expect them to stay on.
What mistakes do families make with co-signing?
- Counting the parent's salary, not their payments. In the worked example, $1,600 a month of the parent's own payments costs the pair $169,000 of buying power.
- Treating co-signing as a reference. A co-signer owes the whole balance if the buyer stops paying, not a share of it.
- Assuming they come off at renewal. Renewal keeps the same borrowers. Removing one means new underwriting.
- Reaching for a co-signer before cheaper levers. The worked example's buyer is $131,500 short on their own, too far for anything else. A smaller gap may close with a debt payoff, a bigger down payment or, for first-time buyers, a 30-year amortization, without putting anyone else on the hook. See how to pass the stress test.
What this means for you
- If you're the buyer: run your numbers alone first on the income needed calculator, so you know the size of the gap you're asking someone to cover. Then add the co-signer's real income and payments on the stress test calculator.
- If you're the parent being asked: ask the lender how it will count your income and your existing payments, and how this mortgage will show up the next time you borrow. You'd owe the full balance, not half.
- If your own credit score is the problem: a guarantor with a score of 600 or more can meet the insured-mortgage rule; a lender can still ask for more.
- If you plan to take the co-signer off later: budget to requalify alone at the qualifying rate of that day. The GDS and TDS calculator shows how close you are.
Frequently asked questions
Does a co-signer have to pass the stress test?
The loan is tested, not each person. The lender checks the combined application at the qualifying rate (contract + 2 points or 5.25%). How it counts a co-signer's income and debts is the lender's own practice.
Do a co-signer's debts count against me?
Expect so. A lender that counts a co-signer's income will normally count their monthly payments in total debt service (TDS) as well, so a co-signer with their own mortgage adds less borrowing power. The exact method is the lender's own practice.
Can a guarantor help me meet the credit score requirement?
For insured mortgages, yes. Federal regulations require at least one borrower or guarantor to have a credit score of 600 or more.
How do I remove a co-signer from my mortgage?
Expect the lender to underwrite you on your own, which means passing the stress test again at the qualifying rate at that time. Ask your lender how it handles it.
Primary sources
- OSFI — Guideline B-20: Residential mortgage underwriting practices and procedures (effective January 1, 2018). Checked .
- Justice Laws — Insurable Housing Loan Regulations (SOR/2012-282), ss. 5, 6 and 6(3.1) (effective February 27, 2025). Checked .
- CMHC — Homeowner mortgage loan insurance: Purchase (eligibility). Checked .
- CMHC — Home Start: 30-year amortization for first-time buyers and new builds. Checked .
- Financial Consumer Agency of Canada — Preparing to get a mortgage: how the stress test impacts your qualification (effective October 15, 2025). Checked .
- OSFI — Final revised Guideline B-20 (letter of October 17, 2017) (effective October 17, 2017). Checked .
- CMHC — Calculating GDS / TDS. Checked .