Mortgage stress test rules in Canada (2026)
Canada's mortgage stress test qualifies you at the greater of your contract rate plus 2 points or 5.25%. OSFI sets it for uninsured loans at federally regulated lenders; federal regulations set it for every insured loan. Renewals and straight switches at renewal are exempt, but refinances and new HELOCs are tested again.
The formula: contract rate + 2 points, or 5.25%
Canada's mortgage stress test makes a lender qualify you at a rate higher than the one you'll pay. The qualifying rate is the greater of your contract rate plus 2 percentage points or 5.25%. Your housing costs at that rate must fit the lender's debt-service limits.
The same formula applies to fixed and variable rates and to every term. At the Bank of Canada's August 2026 average for new insured 5-year fixed mortgages, 4.12%, the qualifying rate is 6.12%. The 5.25% floor only matters when your rate is below 3.25%.
OSFI's minimum qualifying rate page states the formula and says OSFI reviews it at least annually. Source: OSFI, Minimum qualifying rate for uninsured mortgages, effective January 29, 2026. Checked .The floor is not a theory. If the same household were offered 2.75%, its rate + 2 would be only 4.75%, so the lender would test it at 5.25% instead. Its maximum would rise only to $607,700, against $572,400 at 4.12%: below 3.25%, a cheaper rate lowers your real payment but stops helping you qualify.
The terms this page uses
- Contract rate
- The interest rate in your mortgage agreement: the one you actually pay.
- Qualifying rate (MQR)
- The rate the lender tests you at: the greater of the contract rate + 2 points or 5.25%.
- GDS
- Gross debt service: housing costs at the qualifying rate (mortgage, property tax, heating, half of condo fees) ÷ gross monthly income. Insured limit 39%.
- TDS
- Total debt service: GDS costs plus your other debt payments ÷ gross monthly income. Insured limit 44%.
- Straight switch
- Moving your mortgage to a new lender at renewal with the same balance and amortization and no equity taken out.
Who sets the stress test
Two federal authorities set the same number for two kinds of loans:
- Uninsured mortgages (20% or more down) at federally regulated lenders. OSFI, the Office of the Superintendent of Financial Institutions, sets the minimum qualifying rate in Guideline B-20. It binds banks and federally regulated trust and loan companies, including lenders often called "B-lenders" such as Equitable Bank and Home Trust.
- Every insured mortgage (under 20% down), at any lender. The test is written into the federal mortgage-insurance regulations, which also cap GDS at 39% and TDS at 44% and require a credit score of 600 for at least one borrower or guarantor. Because the rule attaches to the insured loan, it applies at credit unions too.
The Bank of Canada does not set the stress test. Its 5-year posted rate was part of the test between 2016 and 2021, which is where the confusion comes from; see the history of the qualifying rate.
Insured test, ratio caps and credit score: Source: Justice Laws, Insurable Housing Loan Regulations (SOR/2012-282), ss. 5, 6 and 6(3.1), effective February 27, 2025. Checked .How a lender applies it: GDS and TDS at the qualifying rate
The lender works out your monthly mortgage payment as if you were paying the qualifying rate, then adds property tax, heating and 50% of any condo fees. That total divided by your gross monthly income is your gross debt service (GDS) ratio. Add your other debt payments (car loans, student loans, card and line-of-credit payments) and you get total debt service (TDS).
For insured loans the limits are 39% and 44%. For uninsured loans OSFI lets each lender set its own limits and method; many use similar numbers. Fail either ratio and the loan doesn't qualify at that price.
A first-time buyer household earning $120,000 with $60,000 saved and $400 a month of other debts, offered 4.12% (the Bank of Canada's average for new insured 5-year fixed loans) over 25 years.
| Household income | $120,000 |
|---|---|
| Down payment | $60,00010%, so the loan is insured |
| Price | $600,000 |
| Contract rate | 4.12% |
| Property tax, heating | 0.8% of price a year, $100 a monthOur planning estimates |
| Mortgage incl. insurance premium | $556,740Premium added to the loan by loan-to-value |
| Qualifying rate | 6.12%4.12% + 2 points |
| Payment at contract vs qualifying rate | $2,965 vs $3,602Monthly, semi-annual compounding |
| GDS at contract vs qualifying rate | 34.6% vs 41.0%Limit 39% |
| TDS at contract vs qualifying rate | 38.6% vs 45.0%Limit 44% |
| Verdict | Passes at the contract rate; fails the stress testMost this household passes at: $572,400 |
At the rate they'd actually pay, this household fits comfortably under both limits. At 6.12% the same mortgage costs $637 a month more on paper, and that pushes GDS over the line. That gap is the whole stress test in one row.
Open this example in the calculator →Computed November 1, 2026.
Who has to pass it, and who doesn't
| Situation | Stress tested? | Rule |
|---|---|---|
| New purchase, less than 20% down (insured), any lender | Yes | Federal insured-mortgage regulations |
| New purchase, 20%+ down, bank or federally regulated trust company | Yes | OSFI B-20 |
| Refinance, top-up or new HELOC at a federally regulated lender | Yes | New underwriting; FCAC says you must pass again |
| Renewal with your current lender | No | OSFI's 2017 B-20 letter: renewals aren't retested |
| Straight switch at renewal (same balance and amortization), uninsured, to a federally regulated lender | No | OSFI, from November 21, 2024 |
| Straight switch at renewal, insured | No | Mortgage Charter (November 21, 2023); low-ratio insured in regulation from December 16, 2024 |
| Uninsured loan at a provincially regulated credit union or caisse | Depends on the province | Provincial regulator; see the province table |
| Private lender or mortgage investment corporation | Not B-20 | Outside OSFI's scope |
A straight switch has conditions. The amortization can't be extended and you can't take equity out; for low-ratio insured switches the balance can rise by at most $3,000 to cover switching costs. Quebec's AMF guideline, which covers Desjardins caisses, has no switch exemption. And the exemption is permission, not an obligation: OSFI's wording is that it no longer expects lenders to apply the qualifying rate, so an individual lender can still choose to requalify you. Ask before you apply. Use the renewal and switch checker to see which path you're on.
Credit unions and provincial lenders
Credit unions and caisses are regulated by their province, so OSFI's B-20 doesn't bind their uninsured lending. Saskatchewan's deposit guarantor and Quebec's AMF prescribe the same contract + 2 points or 5.25% test. Alberta's last published credit-union guidance (2018) used contract + 2 points or the Bank of Canada posted rate. BC, Ontario, Manitoba and Nova Scotia leave the buffer to each credit union. The province-by-province table has the details and sources.
Loan-to-income limits: not a cap on you
Since each bank's 2025 fiscal year, OSFI also limits the share of a lender's new uninsured mortgages that exceed 4.5 times the borrower's income. It's a limit on the lender's portfolio, not on your loan, so it doesn't change whether you pass. It can make a lender choosier near the end of a quarter if it's close to its limit.
OSFI says the LTI limit "is not a limit on each individual loan". Source: OSFI, Loan-to-income limits for uninsured mortgage portfolios, effective January 29, 2026. Checked .What do people get wrong about the stress test?
- "20% down means no stress test." Not at a bank or federally regulated trust company: B-20 applies to uninsured loans too. Only some provincially regulated lenders differ.
- "5.25% is the Bank of Canada's rate." It's OSFI's floor (and the same floor in the federal insurance rules). The Bank of Canada's posted rate stopped being part of the test on June 1, 2021.
- "Switching lenders at renewal means passing again." Not for a straight switch since late 2024, though a lender may still choose to requalify you, and Quebec caisses have no exemption.
- "A variable rate gets you a softer test." The formula is the same: your variable rate + 2 points or 5.25%.
- "The test caps me at 4.5 times my income." The 4.5× figure is a limit on each lender's portfolio, not on individual borrowers.
Is the stress test changing?
Not as of November 1, 2026. OSFI's rule page, last modified January 29, 2026, still shows contract + 2 points or 5.25%. In November 2024 OSFI said it would consider whether a prescribed qualifying rate is still needed once its loan-to-income limits are fully in place, and in January 2026 it opened a consultation to fold B-20 into a single credit-risk guideline without proposing a different rate. We track it on our "is it going away" page and re-check the rule before every update.
What this means for you
- Buying with under 20% down: plan on being tested at your rate + 2 points at any lender. Run the stress test calculator with the rate you've been offered, not an average.
- Buying with 20% or more: a bank will test you the same way. If you're close to the line, a credit union in a province without a prescribed rate may qualify you differently; compare the cost first (province table).
- Renewing: you don't need to requalify to stay, and usually not to switch. Check the offer on the renewal and switch checker before you sign.
- Refinancing or adding a HELOC: expect to be tested again at the new rate + 2 points; see refinancing and the stress test.
Frequently asked questions
What is the stress test rate in 2026?
The greater of your contract rate + 2 points or 5.25%. At the 4.12% average insured 5-year rate (2026-08), that's 6.12%.
Does the stress test apply with 20% down?
Yes at banks and other federally regulated lenders (OSFI B-20). Provincially regulated credit unions follow their own regulator for uninsured loans.
Is the stress test the same for insured and uninsured mortgages?
Yes, the same formula: contract + 2 points or 5.25%. Insured loans also have fixed GDS/TDS caps of 39% and 44%; uninsured lenders set their own.
Do I have to pass the stress test to renew?
Not with your current lender, and not for a straight switch to another federally regulated lender (same balance and amortization). Borrowing more or extending the amortization means you requalify.
Primary sources
- OSFI — Minimum qualifying rate for uninsured mortgages (effective January 29, 2026). Checked .
- OSFI — Guideline B-20: Residential mortgage underwriting practices and procedures (effective January 1, 2018). Checked .
- OSFI — Final revised Guideline B-20 (letter of October 17, 2017) (effective October 17, 2017). Checked .
- Justice Laws — Insurable Housing Loan Regulations (SOR/2012-282), ss. 5, 6 and 6(3.1) (effective February 27, 2025). Checked .
- Justice Laws — Eligible Mortgage Loan Regulations (SOR/2012-281) (effective February 27, 2025). Checked .
- OSFI — OSFI exempts uninsured mortgage straight switches from the prescribed MQR and implements portfolio LTI limits (effective November 21, 2024). Checked .
- Department of Finance Canada — 2023 Fall Economic Statement, Chapter 1: the Canadian Mortgage Charter (effective November 21, 2023). Checked .
- Department of Finance Canada — Straight switches and portfolio insurance (effective December 16, 2024). Checked .
- OSFI — Loan-to-income limits for uninsured mortgage portfolios (effective January 29, 2026). Checked .
- OSFI — Backgrounder: minimum qualifying rate (MQR) (effective November 21, 2024). Checked .
- OSFI — Quarterly release: LTI limits and B-20 (January 2026) (effective January 29, 2026). Checked .
- Financial Consumer Agency of Canada — Preparing to get a mortgage: how the stress test impacts your qualification (effective October 15, 2025). Checked .
- CMHC — Calculating GDS / TDS. Checked .
- OSFI — Who we regulate (federally regulated banks and trust companies) (effective August 21, 2026). Checked .