Canada's Mortgage Stress Test
The financial stress test is a federal guideline that is designed to protect Canadians to ensure they will be financially okay if interest rates were to rise substantially above their current mortgage rate. There are two options:
Down Payment between 5%-20%
Borrowers that have a down payment between 5% and 20% will be tested at the Bank of Canada Conventional five- year mortgage rate currently sitting at 5.19%.
Down Payment of 20% or more
Borrowers that have a down payment of 20% or higher will be tested at the highest rate of the following:
Bank of Canada conventional five-year rate
Your contract rate +2%
Some Institutional Lenders don't operate under the Stress Test, so you may qualify for up to 25% more.