This mortgage stress test calculator helps you check if you will pass mortgage qualification and be able to afford the home you are looking to purchase.
What is the mortgage stress test rate?
The stress test rate is designed to see if you are able to afford payments on a mortgage in Canada if your mortgage rate raises in the future.
To test mortgage payment affordability when qualifying for a mortgage lenders will see what your mortgage payment would be if your mortgage rate rises. They use this qualifying rate and check your gross debt service (GDS) and total debt service (TDS) ratios to see if you are able to afford mortgage payments at increased rates.
The stress test rate in Canada is the higher of 5.25% and your mortgage rate plus 2%. The last stress test change was effective June 1, 2021 when the interest rate raised from 4.79% to 5.25%. This Bank of Canada has set the qualifying rate as 5.25%. This benchmark rate is used if your mortgage rate plus 2.00% is less than the qualifying rate.
If the current mortgage rate you were able to secure is 2.45%. Your lender would stress test your mortgage payment as if your mortgage rate was 5.25% since this is the higher of two options. However, if your mortgage rate was 4.75% then they would use 6.75% (the higher of 5.25% and 6.75% = 4.75% + 2.00%) in the stress test to check your mortgage affordability.
When is your mortgage stress tested?
Your mortgage is stress tested if it is a new mortgage, refinancing or switching lenders. If you renew your mortgage with the same lender you are exempt from the stress test. You may also be exempt from the stress test if you get your mortgage from credit unions, B-lenders or private lenders.
If you are unable to pass the mortgage stress test then you will not be eligible to get a mortgage at a federally-regulated lender.
Canada mortgage stress test calculator
This mortgage stress test calculator uses the up to date qualifying rate criteria to stress test your mortgage and see if you qualify based on the debt service ratios. The mortgage stress test is calculated using the higher of 5.25% or your mortgage rate plus 2.00% in addition to your other home price inputs.