Every agent can recite the stress test. Far fewer can tell a client, on the first call, roughly how much house it takes away from them.
That number is the one the client cares about. Here is how to get to it quickly.
The rule, stated properly
The minimum qualifying rate is the greater of the mortgage contract rate plus two percent, or 5.25 percent.
OSFI confirmed in January 2026 that the rate stays where it is. It applies to uninsured mortgages under Guideline B-20, and the Department of Finance applies the same test to insured mortgages.
Two words do the work. Greater of. Not the contract rate. Not 5.25. Whichever is higher.
What it removes
Take a household with ninety thousand of income, no other debt, property tax of four hundred a month and heat at a hundred and fifty. Twenty percent down, twenty-five year amortization.
At a contract rate of four percent, the client qualifies at six percent. Run the ratios at six and the mortgage they can carry is meaningfully smaller than the one they could afford at four. The gap between the two, at these numbers, runs to roughly sixteen to eighteen percent of the mortgage amount.
That is the honest answer to "how much does the stress test cost me." Somewhere around a fifth of the purchase, for most files, most of the time.
It is not a fixed percentage, because the buffer is two points on a base that moves. When contract rates were seven, the buffer was a smaller share of nine. When contract rates are three, the floor takes over and the buffer is effectively larger.
Where the floor actually binds
This is the part that gets taught wrong.
The 5.25 percent floor only matters when the contract rate plus two percent lands below it. That means a contract rate below 3.25 percent.
At a contract rate of 3.25, the two options are identical. At 3.24, the floor takes over. At 3.26 and up, contract plus two wins and the floor is irrelevant.
With prime at 4.45 percent, a discounted variable can get under that line. Most fixed-rate files will not. So for most of what crosses your desk right now, the qualifying rate is simply the contract rate plus two.
Worth knowing which one binds, because it tells you what happens to the file if rates move. When contract plus two is binding, a rate drop helps your client qualify. When the floor is binding, a rate drop does nothing for qualifying at all.
The exemptions, stated carefully
As of late 2024, insured straight switches at renewal are exempt, and so are same-lender renewals. OSFI does not expect lenders to apply the MQR to uninsured straight switches at renewal either.
Everything else is still in scope. Purchases. Refinances. Anything restructured enough to look like a refinance. A switch where something about the mortgage changes.
The word doing the work is straight. A straight switch moves the same mortgage to a new lender on the same terms. Add a dollar, change the amortization, roll in a penalty, and it is not a straight switch any more.
Three things that move the number more than people think
The amortization. Twenty-five to thirty years changes the qualifying payment enough to matter, and on an insured file it is not always available.
Condo fees. Fifty percent of the monthly fee goes into the ratios, not the whole amount and not zero. A six hundred dollar fee adds three hundred to the calculation.
Revolving balances. Most monoline lenders use three percent of the balance. Some banks use three percent of the limit, which is a very different number for a client with a large unused line of credit. If the file is tight, ask which the lender uses before you submit.
Run it rather than estimating it
We built a GDS and TDS calculator with the stress test in it and put it up free. Enter the income, the payment, the taxes and the debts, and it gives you both ratios at the qualifying rate, tells you which limit is binding, and shows you how much room is left.
Open the GDS and TDS calculator
It also tells you which side of the 5.25 line the file is on, which saves the argument.
Going deeper
Chapter 11 of Residential Mortgage Underwriting in Canada covers debt service ratios in full, including what belongs in each ratio, how insured and uninsured thresholds differ, and how to improve a borrower's numbers without moving the purchase price.
