The mortgage stress test in 2026: who still has to pass it, and what it costs you
When the mortgage stress test arrived for uninsured borrowers on January 1st, 2018, every lender handled deals already in progress differently. We wrote about it at the time. Eight years later, the test is still here, but the rules around it have moved. Some borrowers no longer have to take it at all, and since the Bank of Canada raised its rate on October 28th, it costs the rest more.
What is the stress test?
When you apply for a mortgage, the lender doesn't check whether you can afford the payment at the rate you'll pay. It checks whether you could afford it at a higher rate, called the minimum qualifying rate. That rate is whichever is higher:
your contract rate plus 2%, or
5.25%.
The rule is the same for uninsured mortgages, which the federal bank regulator OSFI sets, and for insured mortgages, which the Department of Finance sets. Neither has changed it since June 2021.
The 5.25% floor only matters when your rate is below 3.25%. No lender we track posts a 5-year fixed rate that low today, so in practice everyone is tested at their rate plus 2%.
Want to see where your own numbers land? Properti Edge ‘Buying Power’ turns your income, debts and down payment into a borrowing range.
Who has to pass it?
Anyone buying a home with a mortgage from a bank or other federally regulated lender.
Anyone refinancing, which means borrowing more against their home.
Anyone with an insured mortgage (less than 20% down), whichever lender they use, because the test is a condition of mortgage insurance.
Who doesn't?
Borrowers switching lenders at renewal: Since November 21st, 2024, an uninsured borrower who moves to another federally regulated lender at renewal doesn't have to pass the test again, as long as the loan doesn't grow by more than $3,000 for costs and the amortization doesn't get longer. No equity take-out. Insured borrowers already had this under the Canadian Mortgage Charter, and low-ratio insurable mortgages followed on December 16th, 2024.
Borrowers renewing with the same lender: Lenders don't requalify you at renewal if nothing else changes.
Some credit union borrowers: Provincially regulated credit unions aren't bound by OSFI's rule for uninsured mortgages. Each province sets its own expectations, and many credit unions apply a similar test anyway. Ask before you assume.
The switch rule is the big one for renewals. Before November 2024, a borrower whose income had fallen, or whose home had lost value, could be stuck with their current lender's renewal offer because they couldn't pass the test elsewhere. Now they can shop.
What does it do to how much you can borrow?
Take a household earning $150,000 a year, with $500 a month in property tax and heat, no other debts, and the 39% limit on housing costs that CMHC uses for insured mortgages. Payments assume a 25-year amortization.
At the typical 5-year fixed rate, 4.90% in the week ending November 6th, 2026, the lender tests at 6.90%. The most this household can borrow is about $630,000.
If the lender used 4.90% with no test, it would be about $760,000. The test takes away about $130,000.
A year ago, the typical rate was 4.50%, so the test rate was 6.50%. The same income qualified for about $653,000. Today that's about $23,000 less.
With the lowest posted rate, 4.20%, the test rate is 6.20% and the limit rises to about $671,000. Shopping for rate shops for qualifying room too.
Per $500,000 borrowed, the payment at 4.90% is about $2,880 a month. At the 6.90% test rate, it's about $3,471. You pay the first. The lender checks that you could pay the second.
These are illustrations, not quotes. They assume semi-annual compounding, which is how fixed rates are quoted in Canada, and your lender's limits may differ.
Related Reading:
For the down payment and insurance side, see ‘First-time buyers are compromising as affordability tightens’.
For what the October hike did to rates, see ‘Two weeks after the rate hike’.
Does a 30-year amortization help?
Yes, but only for some buyers. Since December 15th, 2024, first-time buyers and anyone buying a newly built home can get a 30-year amortization on an insured mortgage. In the example above, that lifts the limit from about $630,000 to about $671,000.
The insured price cap also rose to $1.5 million on that date, so more buyers can put less than 20% down.
What has OSFI said about the test?
OSFI reviews the buffer and the floor at least once a year. In January 2026 it made its loan-to-income limits permanent. Those limits cap how much of each bank's new uninsured lending can go to borrowers owing more than 4.5 times their income. They apply to the bank's whole portfolio, not to each borrower. OSFI said the stress test stays in place "as a complement at this time." Home builders asked OSFI in August to drop it. As of today, the rule hasn't changed.
What about deals already in progress?
That was the question in 2018, and it's coming back. The November 5th federal budget proposes to raise the price limit for optional mortgage insurance, the kind a borrower with 20% or more down can choose, from $1 million to $1.5 million, and to allow 30-year amortizations on it for first-time buyers and new homes. Neither proposal has a start date yet.
When the insured rules changed in December 2024, what counted was the date of the mortgage insurance application, not the date you signed to buy. If the same approach is used again, a buyer who applies before the start date gets the old rules. Lenders can still set their own conditions, as they did in 2018, so ask yours how it will handle an approval that spans the change.
What can you do?
Find out your test rate before you shop. It's your quoted rate plus 2%.
Compare lenders. A lower rate lowers your test rate too.
At renewal, remember you can switch lenders without passing the test again, if you don't borrow more or stretch the amortization.
If you're a first-time buyer or buying new, ask whether a 30-year insured mortgage fits.
Talk to a mortgage broker. They see how many lenders, including credit unions, handle your situation.
Rates across lenders: high, low and typical. Properti Edge analysis of posted rates of 25 Canadian lenders, including the six largest banks. Week ending November 6th, 2026.
From Properti Edge
See your borrowing range before you shop
Enter your income, debts and down payment in Buying Power to see a borrowing range at today's rates. Ask the AI Advisor to explain any line, including the stress test.
A range, not an approval. General information, not regulated advice.
This is general information, not regulated advice. Speak to a mortgage broker or your lender about your situation before acting.
