How the mortgage stress test calculator works
The live tool stays on the stress test calculator. This page is the 2026 rule write-up behind the MQR math, with a worked $500,000 example from the same engine the calculator uses.
How the Stress Test Works in 2026
The Canadian mortgage stress test is an OSFI rule (Guideline B-20) that has been the binding qualifying constraint for most Canadian borrowers since 2018. It exists to ensure new borrowers can absorb a meaningful rate increase without payment-shock distress at renewal. The qualifying rate — the Minimum Qualifying Rate, or MQR — is the greater of 5.25% or your contract rate plus 2 percentage points.
Federally regulated lenders apply the MQR to two ratios. GDS (Gross Debt Service) sums your principal and interest at the MQR, your property taxes, and your heating costs, and caps the total at 39% of gross household income. TDS (Total Debt Service) adds your other monthly debt payments (car loans, credit cards, student loans) and caps the combined total at 44% of gross income. Whichever ratio binds first sets your maximum qualifying mortgage.
You still pay the contract rate. The stress test only sets the qualifying payment that GDS and TDS are measured against. That is why a 5.25% five-year fixed is underwritten at 7.25%, and why a page that only quotes the contract payment understates the hurdle.
As of November 21, 2024, OSFI removed the MQR requirement for uninsured straight-switch renewals — borrowers moving an existing mortgage to a new lender at renewal without changing the loan amount, remaining amortization, or payment schedule no longer need to re-qualify at the stress-test rate. Insured mortgages have not required the test on straight switches for years. The stress test still applies to new purchases, refinances, equity take-outs, and any renewal where loan terms change.
Worked example: $500,000 uninsured at 5.25%
Take a $500,000 uninsured mortgage, 25-year amortization, paid monthly, Canadian semi-annual compounding. The contract rate is 5.25%, so the MQR is 7.25% — the floor and the contract-plus-two buffer coincide. Payments below are computed with the same engine as the live calculator.
GDS and TDS do not care about the $2,979.59 you actually write each month. They care about the $3,579.59 qualifying payment. That gap — a little over $600 a month on this file — is the entire mechanism. It is also why a borrower who “can afford” the contract payment can still fail the test.
Which ratio binds: GDS vs TDS
Same $120,000 household income, $100,000 down, 1% property tax, $150 heat, 25-year amortization, 5.25% contract (so 7.25% qualifying). The only thing that changes is other monthly debt.
| Other monthly debt | Max purchase | GDS / TDS at max | What binds |
|---|---|---|---|
| $0 | $547,537 | 39.0% / 39.0% | GDS at 39% |
| $650 | $529,229 | 37.5% / 44.0% | TDS at 44% |
Adding $650 a month of other debt does not change the GDS formula at all, but it shrinks the TDS room. The lower of the two price limits is the one that prints on a commitment. Run the same pair of inputs on the stress test calculator to see which ratio is binding on your file.
Stay, switch, or refinance
| Path | Prescribed MQR | Since |
|---|---|---|
| Stay with the incumbent | Not applied | Always — it is not a newly underwritten mortgage |
| Uninsured straight switch | Exempt | 21 November 2024 |
| Insured straight switch | Exempt | Years earlier than the uninsured change |
| Refinance, cash-out, or longer amortization | Full MQR | Unchanged — it is new underwriting |
The exemption is narrow on purpose. Keep the loan amount, keep the remaining amortization the same or shorter, keep the payment schedule, and an uninsured switch at renewal is priced at the new contract rate. Roll in a few thousand dollars of fees, stretch the amortization to blunt payment shock, or pull equity, and you are back inside the test. That is the distinction the calculator is built to show.