Qualification

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.

The test doesn't change what you actually pay — it changes what you're allowed to borrow. If you're offered 4.39%, the lender qualifies your debt ratios at 6.39%, so your approved amount is smaller than your real payment would suggest.

It applies to every federally regulated lender on purchases, refinances, and even most switches at renewal. Provincially regulated credit unions sometimes qualify at the contract rate instead, which can approve a file the banks won't.

Because the test caps borrowing, the levers that help are a larger down payment, paying down other debts (which frees up your ratios), or a co-applicant. Run your numbers on our stress-test calculator before you make an offer so there are no surprises.

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More on Qualification

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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.

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.

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