Mortgage Stress Test Calculator
Find out if you can pass Canada's mortgage stress test. We'll check your GDS/TDS ratios at the qualifying rate.
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What is the Mortgage Stress Test?
The mortgage stress test ensures you can afford your mortgage if interest rates rise. You must qualify at the higher of 5.25% or your rate + 2%.
To pass, you need:
- GDS ratio ≤ 39%
- TDS ratio ≤ 44%
- Minimum down payment met
Note: Credit unions and private lenders may have different requirements.
Understanding the Canadian Mortgage Stress Test in 2025
The mortgage stress test is one of the most important factors determining whether you can qualify for a mortgage in Canada. Introduced to protect both borrowers and the financial system from potential interest rate increases, this test has become a defining feature of the Canadian mortgage landscape.
Whether you're a first-time homebuyer in Ontario or looking to refinance your existing mortgage, understanding how the stress test works—and how to pass it—is essential for your home buying journey. This comprehensive guide explains everything you need to know about the mortgage stress test in 2025.
What is the Mortgage Stress Test?
The mortgage stress test is a qualification requirement that ensures borrowers can afford their mortgage payments even if interest rates rise significantly. Rather than qualifying at your actual mortgage rate, you must demonstrate you can afford payments at a higher "qualifying rate."
According to the Office of the Superintendent of Financial Institutions (OSFI), the qualifying rate is the higher of:
- The benchmark rate of 5.25% (also called the "stress test floor")
- Your contract rate plus 2%
For example, if you're offered a mortgage rate of 4.5%, you would need to qualify at 6.5% (4.5% + 2%), since that's higher than the 5.25% floor. If your rate is 3.0%, you would qualify at 5.25% (the floor), since 3.0% + 2% = 5.0% is below the floor.
Current Stress Test Rates (December 2025)
As of December 2025, here are the typical stress test rates based on current market conditions:
| Mortgage Type | Typical Rate | Stress Test Rate |
|---|---|---|
| Insured (down payment < 20%) | ~3.79% | 5.79% |
| Uninsured (down payment ≥ 20%) | ~3.84% | 5.84% |
| Uninsurable (price ≥ $1.5M or refinance) | ~4.19% | 6.19% |
Note: Rates change frequently. Use the calculator above with your actual offered rate for accurate results.
Who Does the Stress Test Apply To?
The stress test applies to most mortgage transactions at federally regulated lenders (banks, credit unions under federal regulation, and mortgage finance companies). Here's a breakdown:
| Scenario | Stress Test Required? |
|---|---|
| New mortgage (any down payment) | Yes |
| Mortgage refinance | Yes |
| Mortgage renewal (same lender, same terms) | No |
| Mortgage renewal (switching lenders, 2024+ rule) | No* |
| Private lenders | No |
*As of 2024, OSFI removed the stress test requirement for borrowers switching lenders at renewal, provided the loan amount and amortization remain unchanged.
Understanding GDS and TDS Ratios
The stress test evaluates your ability to afford payments using two key metrics: the Gross Debt Service (GDS) ratio and Total Debt Service (TDS) ratio. These ratios measure how much of your income goes toward debt payments.
Gross Debt Service (GDS) Ratio
The GDS ratio measures housing costs as a percentage of your gross monthly income. It includes:
- Mortgage payment (calculated at the stress test rate)
- Property taxes (monthly equivalent)
- Heating costs
- 50% of condo fees (if applicable)
GDS Formula:
GDS = (Mortgage Payment + Property Tax + Heating + 50% Condo Fees) ÷ Gross Monthly Income × 100
Maximum allowed: 39%
Total Debt Service (TDS) Ratio
The TDS ratio includes all your housing costs (from GDS) plus all other monthly debt obligations:
- All GDS costs
- Car loan payments
- Credit card minimum payments
- Student loan payments
- Personal loan payments
- Child support or alimony
TDS Formula:
TDS = (All Housing Costs + All Other Debt Payments) ÷ Gross Monthly Income × 100
Maximum allowed: 44%
CMHC Insurance Requirements
If your down payment is less than 20%, you'll need mortgage default insurance from CMHC, Sagen, or Canada Guaranty. These insurers have specific requirements that work alongside the stress test:
| Requirement | CMHC Standard |
|---|---|
| Minimum Credit Score | 600 |
| Maximum GDS Ratio | 39% |
| Maximum TDS Ratio | 44% |
| Minimum Down Payment | 5% |
| Maximum Purchase Price | $1,500,000 |
| Maximum Amortization | 25 years (30 for first-time buyers) |
As of December 15, 2024, first-time homebuyers and purchasers of new construction can access 30-year amortizations on insured mortgages, providing more flexibility for qualifying.
How the Stress Test Affects Your Buying Power
The stress test significantly reduces how much you can borrow compared to qualifying at your actual rate. Here's an example showing the impact:
| Scenario | Without Stress Test | With Stress Test |
|---|---|---|
| Household Income | $100,000 | $100,000 |
| Qualifying Rate | 4.5% | 6.5% |
| Max Mortgage Amount | ~$540,000 | ~$440,000 |
| Reduction in Buying Power | ~$100,000 (18.5%) | |
This reduction in buying power is intentional—it creates a buffer to protect you if rates rise during your mortgage term or at renewal.
History of Canada's Mortgage Stress Test
The stress test has evolved significantly since its introduction. Here's a timeline of key changes:
2016: Introduction for Insured Mortgages
The federal government introduced the stress test for insured mortgages (down payment less than 20%). Borrowers had to qualify at the Bank of Canada's 5-year benchmark rate.
2018: Expansion to Uninsured Mortgages
OSFI expanded the stress test to uninsured mortgages (20%+ down payment). Borrowers had to qualify at the greater of the benchmark rate or their contract rate + 2%.
2021: Floor Rate Increased to 5.25%
OSFI raised the minimum qualifying rate to 5.25%, reducing buying power by approximately 4-5% for many borrowers.
2024: Renewal Exemption
OSFI removed the stress test requirement for borrowers switching lenders at renewal, provided the loan amount and amortization remain unchanged. This addressed concerns about reduced competition.
2024: 30-Year Amortization for First-Time Buyers
First-time homebuyers and new construction purchasers gained access to 30-year amortizations on insured mortgages, improving affordability.
Tips to Pass the Mortgage Stress Test
If you're concerned about passing the stress test, here are strategies that can help:
💡 Reduce Your Debt
Pay down credit cards, car loans, and other debts before applying. Every $500/month in debt payments reduces your mortgage qualification by approximately $80,000-$100,000.
💡 Increase Your Down Payment
A larger down payment means a smaller mortgage amount, making it easier to qualify. Consider using RRSP withdrawals (Home Buyers' Plan) or FHSA contributions.
💡 Add a Co-Borrower
Adding a spouse or partner's income to your application can significantly increase your qualification amount. Their debts will also be included, so ensure the net effect is positive.
💡 Consider a Longer Amortization
A 30-year amortization (if eligible) results in lower monthly payments, making it easier to pass the stress test. First-time buyers can now access this on insured mortgages.
💡 Work with a Mortgage Professional
A dual-licensed mortgage broker and real estate agent can help you understand your options, find the best rates, and structure your application for success.
What If You Don't Pass the Stress Test?
Failing the stress test at a federally regulated lender doesn't mean homeownership is impossible. Here are some alternatives:
- Credit Unions: Some provincially regulated credit unions are not required to apply the stress test, though many voluntarily do.
- Private Lenders: Private mortgage lenders don't apply the stress test but charge significantly higher rates (often 8-12%+).
- B-Lenders: Alternative lenders may have more flexible qualification criteria but typically charge higher rates.
- Wait and Save: Use the time to pay down debt, increase your down payment, or boost your income.
Important: While these alternatives exist, they often come with higher costs. The stress test exists to protect you—if you can't pass it, carefully consider whether you're truly ready for homeownership at that price point.
Frequently Asked Questions
What is the current stress test rate in Canada?
The stress test rate is the higher of 5.25% (the floor rate) or your contract rate plus 2%. As of December 2025, most borrowers are qualifying at rates between 5.79% and 6.19% depending on their mortgage type.
Do I need to pass the stress test for a mortgage renewal?
No, if you're renewing with your current lender or switching to a new lender without increasing your mortgage amount or extending your amortization, you don't need to pass the stress test. This rule was updated in 2024.
What are the GDS and TDS limits for the stress test?
For CMHC-insured mortgages, the maximum GDS ratio is 39% and the maximum TDS ratio is 44%. Some lenders may have slightly different limits, but these are the standard CMHC requirements.
Can I avoid the stress test by using a private lender?
Yes, private lenders are not required to apply the stress test. However, private mortgages come with significantly higher interest rates (often 8-12% or more) and additional fees. This should be considered a last resort.
How much does the stress test reduce my buying power?
The stress test typically reduces buying power by 15-20% compared to qualifying at your actual rate. For a household earning $100,000, this could mean qualifying for $100,000 less in mortgage.
Does the stress test apply to variable-rate mortgages?
Yes, the stress test applies to both fixed and variable-rate mortgages. For variable rates, you must qualify at the higher of 5.25% or your variable rate plus 2%.
What happens if interest rates drop after I get my mortgage?
If rates drop, your actual payments will be lower than what you qualified for, giving you extra financial cushion. At renewal, you'll benefit from the lower rates. The stress test ensures you can handle higher rates, but you benefit when rates are lower.
Need Help with Your Mortgage?
Connect with a dual-licensed mortgage broker and real estate agent who can guide you through the stress test and help you find the right home.
Find a DualBrokerSources & References
- • Office of the Superintendent of Financial Institutions (OSFI) - osfi-bsif.gc.ca
- • Canada Mortgage and Housing Corporation (CMHC) - cmhc-schl.gc.ca
- • Bank of Canada - bankofcanada.ca
- • Financial Consumer Agency of Canada (FCAC) - canada.ca/en/financial-consumer-agency
- • Department of Finance Canada - canada.ca/en/department-finance