🏠 EasyTools.ca › Guides › Mortgage Stress Test
·· Mortgage · OSFI
Mortgage Stress Test: How It Works and How to Pass
Canada's stress test forces you to qualify at a higher rate than you'll actually pay — here's what that means for your purchasing power.
Updated June 2026 · 6 min read · Source: OSFI B-20 Guideline
The Qualifying Rate: The Core Rule
You must qualify at the GREATER of:
Contract Rate + 2%
Your lender's actual offer plus 2 percentage points
OR
5.25%
OSFI minimum qualifying rate floor
Example: If your lender offers 4.5%, you must qualify at 6.5% (4.5 + 2 > 5.25). If rates drop and you're offered 2.8%, you qualify at 5.25% (2.8 + 2 = 4.8 < 5.25, so the floor applies). Either way, you're qualifying significantly above your actual payment.
GDS and TDS Ratios Explained
Lenders use two ratios to test affordability at the qualifying rate. Both are calculated against gross (pre-tax) income.
GDS ≤ 39%
Gross Debt Service includes:
• Mortgage payment (at qualifying rate)
• Property taxes
• Heating costs
• 50% of condo fees (if applicable)
GDS = (above costs) ÷ gross income
TDS ≤ 44%
Total Debt Service adds all other debt:
• All GDS costs
• Car payments
• Student loans
• Credit card minimums
TDS = (all above) ÷ gross income
Key insight: Your debt payments hurt twice — once for the mortgage you're applying for (GDS), and once for everything else you already owe (TDS). Paying down non-mortgage debt before applying can significantly increase what you qualify for.
Strategies to Qualify for More Mortgage
1
Pay down high-payment debts first
Car loans and personal loans with large monthly minimums crush your TDS ratio. Eliminating a $600/month car payment can increase your qualified mortgage amount by $100,000+ in some cases.
2
Add a co-borrower
Adding a spouse or co-signer with income increases gross household income used in the GDS/TDS calculation. Both applicants' debts are included, so the co-borrower should have little or no debt.
3
Increase your down payment
A larger down payment reduces the mortgage amount, so you qualify on a smaller amount at the stress test rate. Going from 5% to 20% also eliminates CMHC insurance, saving thousands at closing.
4
Try a credit union
Provincial credit unions aren't subject to OSFI B-20. Some apply their own internal stress test that's less stringent. Rates may be slightly higher, but qualifying is easier.
5
Choose a longer amortization
A 30-year amortization (allowed with 20%+ down) gives lower monthly payments, improving your GDS ratio. Only available at credit unions and some lenders for high-ratio mortgages.
🏦 Run Your Stress Test
Enter your income, debts, and down payment to see exactly what mortgage amount you qualify for at the stress test rate — and how much house you can actually buy.
Open Stress Test Calculator →
Frequently Asked Questions
What is the stress test rate in 2026?You qualify at the greater of your contract rate + 2% or 5.25%. Most borrowers currently stress test at contract + 2% since rates are above 3.25%.
Does the stress test apply to renewals?No — renewing with your existing lender is exempt. Switching lenders or refinancing triggers the stress test.
Can I avoid the stress test?Provincially regulated credit unions are exempt (and may use a lower bar), but it's not a free pass — they have their own qualifying standards and often charge slightly higher rates.