The mortgage stress test in BC: your payment vs. the payment you're tested at

Every buyer in Canada who takes a mortgage from a federally regulated lender has to pass the stress test. The lender doesn't check whether you can afford the payment at your actual rate. It checks whether you could afford it at a higher qualifying rate: the greater of 5.25% or your contract rate plus two percentage points.

That one rule decides how much a Metro Vancouver household can borrow. This guide shows the gap between the payment you'll make and the payment you're tested at, how much mortgage different incomes support, and how the debt-service ratios work line by line.

In a high-priced market, the qualifying rate often matters more to a buyer than the rate on the mortgage itself.

Your payment vs. the tested payment

Canadian fixed-rate mortgages compound semi-annually. On a $600,000 mortgage over 25 years:

The tested payment is roughly $700 a month higher than the real one at every rate.

Contract rate	Real payment	Tested at	Tested payment
3.5%	$2,996	5.50%	$3,662
4.0%	$3,156	6.00%	$3,839
4.5%	$3,321	6.50%	$4,019
5.0%	$3,490	7.00%	$4,202
5.5%	$3,662	7.50%	$4,389

The 5.25% floor matters only when contract rates fall below 3.25%. At current rates, it's always contract plus 2%.

The two ratios lenders use

• Gross debt service (GDS): the tested mortgage payment, plus property tax, heating, and half of any strata fee, divided by gross monthly income. The usual limit is 39%.
• Total debt service (TDS): everything in GDS plus car loans, student loans, credit card minimums, and lines of credit. The usual limit is 44%.

This household passes GDS with $663 a month to spare. A $400 car payment would still fit under TDS.

How much a household can borrow

Each $10,000 of household income supports about $50,000 more mortgage at today's rates.

At a 4% contract rate, tested at 6%, and with $650 a month for property tax, heat, and half the strata fee:

Household income	Largest mortgage (GDS 39%)
$100,000	about $406,000
$150,000	about $660,000
$200,000	about $914,000

Add the down payment to find a price range. A household earning $150,000 with $130,000 saved could look at homes around $790,000, before closing costs such as property transfer tax.

For current five-year fixed and variable rates from BC lenders, see EstateBlock's BC mortgage rates page.

Strata fees count toward the debt ratios, so two condos at the same price can qualify very differently.

Ways buyers improve their numbers

1. Pay off small debts first. A $350 car payment can cost tens of thousands of dollars of borrowing room under TDS.
2. Look at strata fees, not just prices. Half of the fee counts in GDS. A $700 fee uses $350 a month of room.
3. Choose a longer amortization if eligible. First-time buyers and buyers of new builds can qualify for a 30-year amortization on insured mortgages, which lowers the tested payment.
4. Add a co-borrower's income if someone will be on title and the mortgage.
5. Credit unions are provincially regulated and may apply their own qualifying rules.

At renewal

Since November 2024, borrowers with uninsured mortgages who switch lenders at renewal without increasing the loan or amortization no longer have to pass the stress test again. That makes shopping around at renewal much easier.

Quick answers

Does the stress test change my payment? No. You pay your contract rate. The test only decides how much you can borrow.

Does it apply to variable-rate mortgages? Yes. The same rule uses the contract rate plus 2% or 5.25%, whichever is higher.

Does it apply to insured mortgages with less than 20% down? Yes, for mortgages from federally regulated lenders.

Sources and further reading

• Office of the Superintendent of Financial Institutions: Guideline B-20, residential mortgage underwriting

Illustrative figures. General information only, not mortgage advice. Lenders apply their own policies on top of these rules.

Photo: Building Condo by Caspar Rubin (CC0); photo: Modern Apartment by George Desipris (CC0). Charts by the author.