# What is the minimum qualifying rate (MQR), and how does it impact my mortgage?

> The minimum qualifying rate (MQR) is the higher of your contract rate plus 2% or 5.25%. Lenders use this rate to ensure you can afford your mortgage payments if rates rise, by stress testing your finances before approval.

Category: Financing
Last verified: 2026-04-14
Source: https://ratellow.com/faqs/financing/what-is-the-minimum-qualifying-rate-mqr-and-how-does-it-impact-my-mortgage

## Answer
## Mortgage Qualifying Rate Explanation

| Parameter             | Value   | Comment                                                |
|-----------------------|---------|--------------------------------------------------------|
| Contract Rate         | 4.29%   | Current 5-year fixed contract rate approx. 4.29%       |
| Qualifying Rate       | 6.25%   | Qualifying Rate = max(contract rate + 2%, 5.25%) = 6.25% for a 4.29% contract rate |

*Note: Qualifying rates ensure borrowers can manage potential rate increases and are used to calculate key ratios like Gross Debt Service (GDS) and Total Debt Service (TDS). The qualifying rate is calculated as the greater of your contract rate plus 2% or the OSFI-set minimum (currently 5.25%).*

## Institutional highlights
- To qualify for a mortgage, you need to prove you can afford payments at your actual interest rate plus a 2% buffer, or at the OSFI-set minimum qualifying rate (currently 5.25%), whichever is higher.
- Lenders will carefully calculate how much of your income goes towards debt to make sure you can handle different interest rates and situations.
- OSFI sets the minimum qualifying rate (stress test floor) and updates it as needed; it is not a government annual review.
- Generally, you shouldn't spend more than 39% of your gross income on housing costs (GDS) or 44% on all debt (TDS).

## Related guide
- https://ratellow.com/guides/borrowed-down-payment

## Sources
- Property value used for the LTV ratio — https://www.osfi-bsif.gc.ca/en/guidance/guidance-library/residential-mortgage-underwriting-practices-procedures-guideline-2017
- Page 3 — https://assets.cmhc-schl.gc.ca/sf/project/cmhc/pdfs/factsheets/new/cmhc-quick-reference.pdf#page=3
- I. Purpose and scope of the guideline — https://www.osfi-bsif.gc.ca/en/guidance/guidance-library/residential-mortgage-underwriting-practices-procedures-guideline-2017#1.0