If you are buying or refinancing in Ottawa, the stress test is one of the main reasons you may qualify for less than you expect. Here is how it works and how to plan around it.
How the stress test works
Your lender calculates your debt ratios (GDS and TDS) using the qualifying rate instead of your actual rate. This makes the payment used in the calculation larger, which reduces the mortgage you can qualify for.
| Contract rate | Qualifying rate |
|---|---|
| 3.00% | 5.25% (the floor applies) |
| 4.00% | 6.00% (contract + 2) |
| 5.00% | 7.00% (contract + 2) |
These are examples of the rule, not current rates.
Who has to pass it?
- Buyers with insured or uninsured mortgages at federally regulated lenders.
- Borrowers who refinance.
- Borrowers who switch lenders at renewal with an insured mortgage or a change in the mortgage. Rules for straight switches of uninsured mortgages at renewal changed in late 2024. See our renewal guide.
Some provincially regulated lenders and credit unions may set their own rules, so it is worth asking about it if you are having trouble qualifying.
How to pass the stress test
- Reduce your debts. Paying down credit cards and loans reduces your TDS.
- Increase your income or add a co-borrower.
- Save a bigger down payment so you need a smaller mortgage.
- Extend your amortization where allowed to lower the payment used in the ratios.
- Talk to a broker about lenders with different policies.
Frequently asked questions
Is the stress test the same for every lender?
The federal minimum applies to federally regulated lenders. Some other lenders can use different tests. A broker can tell you which lenders fit your situation.
Does the stress test affect my actual payment?
No. You pay your contract rate. The stress test only affects how much you can qualify for.
Can I avoid the stress test?
Some lenders that are not federally regulated do not use the same test, and straight switches of eligible uninsured mortgages at renewal may not require it. Always confirm with the lender.
Related: How much mortgage can I afford in Ottawa?
See how the stress test affects your buying power
Answer a few quick questions and we will connect you with a licensed Ontario mortgage professional. It is free to use and there is no obligation.
Get matched nowImportant: Ottawa Mortgages is an independent information and referral service. We are not a lender, mortgage broker or mortgage brokerage, and we do not give mortgage advice or make credit decisions. If you ask to be connected, your details may be shared with a licensed Ontario mortgage professional, who may compensate us. Rates, rules and eligibility change often. Confirm details with a licensed professional and official sources, and check any Ontario mortgage broker’s licence with FSRA. Read our full disclosure.