How do lenders assess my ability to manage mortgage payments?
Lenders evaluate your ability to manage payments using Gross Debt Service (GDS) and Total Debt Service (TDS) ratios.
Key Points
Lenders look at your income and debts to see if you can afford your mortgage payments.
These calculations include a buffer to make sure you can handle higher interest rates or unexpected expenses.
To qualify for a mortgage, you need to prove you can afford your payments at your actual interest rate plus a buffer, or a set minimum rate.
This rate is reviewed regularly to make sure it's still a good measure of affordability.
Your mortgage payment, income, heating costs, property taxes, condo fees, and other debts all factor into whether you qualify for a mortgage.
Primary sources
Primary sources cited by the Ratellow Research Team. Editorial standards · Correction policy
Related Questions
How does the stress test affect my 2026 renewal options?
Same-lender renewals and uninsured straight switches (OSFI, November 21, 2024) are exempt from the prescribed MQR. A refinance, an insured switch, or any increase in loan amount still requires the stress test — greater of 5.25% or contract + 2%.
What's the difference between insured and uninsured mortgage renewals?
Insured mortgages face stricter CMHC/Sagen constraints while uninsured mortgages enjoy flexible OSFI-only guidelines.
Should I consider switching lenders or negotiate with my current lender?
Your switching decision hinges on rate differential versus requalification risk, with break-even analysis determining optimal strategy.
When should I start my mortgage renewal process?
Start your renewal process 120-180 days before your current term expires to maximize your strategic options.