Qualification

Qualifying rate

The stress-test rate you must qualify at: the greater of your contract rate plus 2% or 5.25%. Doesn't change what you actually pay — only whether you qualify.

Think of the qualifying rate as the 'what-if' rate. If your contract rate is 4.59%, the lender tests your GDS and TDS ratios at 6.59% to make sure you could absorb higher rates at renewal. You still pay 4.59%.

Because the qualifying rate is higher than your real rate, your maximum mortgage is roughly 15–20% smaller than your actual payment could support. That gap is the single biggest reason buyers qualify for less than they expect.

Credit unions and some provincial lenders may qualify at the contract rate, which can rescue a file that's just over the federal limit — one of the situations where a broker's lender access directly changes the outcome.

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Co-signer

A creditworthy individual (often a parent) who agrees to be equally liable for the mortgage so the primary applicant qualifies. The co-signer's income is added to the application; their credit is fully exposed.

Credit score

A 300–900 score from Equifax or TransUnion summarizing your credit history. 680+ unlocks most A-lender rates. 600-680 typically routes to alt or B lenders.

Debt service ratio

The percentage of your gross income that goes to housing (GDS) or all monthly debt obligations (TDS). OSFI's stress test caps GDS at 39% and TDS at 44% on insured files.

Down payment

The cash you put toward the purchase. Minimums: 5% on the first $500K, 10% on $500K–$1M, 20% above $1M. Below 20% requires CMHC, Sagen, or Canada Guaranty insurance.

GDS

Gross Debt Service ratio

Your housing costs (mortgage payment + property tax + heating + 50% of condo fees) as a percentage of gross income. Most lenders cap GDS at 39% on insured files, 44%+ at alt lenders.

Stress test

The mandatory check that you'd still qualify if rates rose to a higher "qualifying rate." Set by OSFI as greater of your contract rate + 2% or 5.25%. Limits how much you can borrow.

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