In short
It applies whether you put down 5% or 25%.
It lowers how much you can borrow, but it builds in room for higher rates at renewal.
How the stress test works
The stress test checks that you could still afford your mortgage if rates were higher. You don't pay the higher rate. The lender just uses it to calculate how much you qualify for.
The qualifying rate is the greater of your contract rate plus 2%, or 5.25%. So if you're offered 4.5%, you qualify at 6.5%.
Your lender then uses that qualifying payment, along with property tax, heating and other debts, to work out your debt service ratios. If those ratios are within limits at the higher rate, you pass.
Who has to pass it?
All insured mortgages, those with less than 20% down, must be qualified this way under federal mortgage insurance rules. Uninsured mortgages from federally regulated lenders, including the big banks, follow the same formula under OSFI's Guideline B-20.
Lenders that aren't federally regulated, such as many provincial credit unions, aren't bound by OSFI's rule for uninsured loans, though many apply a similar test. OSFI reviews the rate at least once a year.
Renewals and switches
Renewing with your current lender doesn't require a new stress test. Since November 21, 2024, OSFI also no longer expects lenders to apply it to an uninsured straight switch: moving your mortgage to another lender at renewal without increasing the loan amount or amortization.
If you borrow more or stretch the amortization, it's treated as new borrowing, and the stress test applies.
What it means for your budget
The stress test reduces how much you can borrow, because your debt ratios are calculated on the higher payment. It also gives you room to absorb a rate increase at renewal.
For example, a payment that fits at your actual rate may push your ratios over the limit at the qualifying rate. That's when buyers lower their price range, increase their down payment or pay down other debts.
The test is a qualification step only. It doesn't change the rate on your mortgage contract.
Common questions about mortgage stress test
What is the mortgage stress test rate in 2026?
It is the greater of your contract rate plus 2% or 5.25%. That formula applies to insured mortgages and to uninsured mortgages at federally regulated lenders. OSFI reviews the uninsured rate at least once a year, so confirm the current rule with your lender.
Do I have to pass the stress test with 20% down?
Yes, if your lender is federally regulated, like a major bank. OSFI applies the same qualifying rate to uninsured mortgages. Some provincially regulated lenders aren't required to, but many use a similar test. Ask any lender you're considering which test it uses.
Is there a stress test when I renew my mortgage?
No, not when you renew with your current lender or make a straight switch to another lender. Since November 21, 2024, uninsured straight switches are exempt as long as the loan amount and amortization don't increase. A refinance is still stress tested.
How much does the stress test reduce what I can borrow?
It depends on your income, debts and rate, but qualifying 2 points higher can noticeably cut your maximum. Your GDS and TDS ratios are calculated at the higher payment. A lender or mortgage professional can show you the exact figure.
Sources
General information for Ontario, updated October 2026. Not legal, tax or mortgage advice. Rules change, so confirm with your lawyer, lender or the source above before you rely on it.