Canadian mortgage stress test calculator
The stress test makes you qualify at a higher rate than you pay. It is the greater of a floor or your rate plus two points. See your qualifying payment and how much cushion you have.
Test the downside before the lender does.
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How the stress test works in Canada
The stress test is a what-if. The lender asks: if rates were higher, could you still make the payment? To pass, you have to qualify at the greater of a policy floor or your contract rate plus two percentage points. So if your contract rate is 4.8% and the floor is 5.25%, you qualify at 6.8%, because your rate plus two is higher than the floor.
The payment you actually make is still based on your real contract rate. The stress test only changes the rate used to decide how much you can borrow. But the gap between the two tells you something useful: how much room you have if rates climb by the time you renew.
Why investors should care beyond qualifying
Even if you clear the test easily, the stress-tested payment is a free look at your downside. If the deal still cash flows at the qualifying rate, you have a real cushion against a rate increase at renewal. If it goes negative at the qualifying rate, you are betting that rates fall, and that is worth knowing before you sign, not after.
Ways to pass a tight test
- Put more down to shrink the loan and the tested payment.
- Lengthen the amortisation to lower the payment, including the 40-year MLI Select path on multi-unit deals.
- Add qualifying income, such as a co-applicant or documented rental income the lender will count.
Stress test questions
What is the mortgage stress test?
It is a rule that makes you qualify at a higher rate than your contract rate. You must show you could still afford the payment at the greater of a set floor or your contract rate plus two percentage points. It protects against rate increases at renewal.
What rate do I qualify at?
You qualify at the higher of the policy floor or your contract rate plus 2%. So a 4.8% contract rate is tested at about 6.8%. This calculator uses that rule so you see the qualifying payment, not just the real one.
Does the stress test apply to rental properties?
Federally regulated lenders apply the test to insured and many uninsured mortgages, including rentals through those lenders. Some private or provincial lenders differ. Either way, knowing the stress-tested payment tells you how much cushion the deal really has.
How do I pass a tight stress test?
Lower the loan with a bigger down payment, lengthen the amortisation to cut the payment, or bring in more qualifying income. A longer amortisation through CMHC MLI Select is one path that lowers the tested payment on multi-unit deals.