The Mortgage Stress Test
How the stress test works in 2026, who it applies to, and how to maximize what you qualify for.
What the stress test actually requires
All federally-regulated lenders must qualify residential mortgages at the greater of 5.25% or your contract rate plus 2%. For most 2026 mortgages, that means qualifying around 6.5–7.5% even if your actual rate is 4.5%. The test exists to ensure you can handle future rate increases.
Who is exempt
Credit unions (provincially regulated) are technically not bound by the stress test, though most apply a similar discipline. Private and alternative lenders apply equity-first underwriting that effectively replaces the stress test.
Straight switches at renewal
Since November 2024, straight switches at renewal (same balance, same amortization) no longer require requalification under the stress test — a meaningful change that opens more competition for renewal pricing.
Maximizing your qualifying income
Beyond base salary, lenders will count: 2-year average of bonuses, commissions, overtime, rental income (with add-backs), child support, alimony, and certain pensions. Documenting these correctly often expands qualifying power by 10–25%.
Working with co-borrowers
Adding a co-borrower (often a parent) adds their income to your application. The co-borrower's debts also count, so the right combination matters. We commonly use this strategy for first-time GTA buyers.
Have questions about your situation?
Every mortgage file has its own story. A 15-minute call with Jay is enough to know your real options.