The mortgage stress test: what you actually have to qualify at

Canadian federally regulated lenders apply a minimum qualifying rate, commonly called the stress test. You must show you could carry the mortgage at the higher of your contract rate plus two percentage points, or 5.25 per cent.

That is why your approved amount is lower than a simple payment calculation suggests. The test applies to both fixed and variable mortgages and to insured and uninsured borrowing at those lenders.

One important nuance: rules were relaxed for straight switches at renewal, meaning moving an existing mortgage to a new lender without changing the amount or amortization does not necessarily require requalification under the test. Ask your broker how it applies to your specific renewal.