The mortgage stress test, formally OSFI Guideline B-20, is a regulatory requirement for federally regulated mortgage lenders. Borrowers must demonstrate they can afford the mortgage at the higher of contract rate plus 2 percentage points or the 5.25% benchmark rate.
How it works
Qualifying rate = max(contract rate + 2%, 5.25%). This rate is used only for ratio testing, not for actual payment. The test feeds into Gross Debt Service (GDS) and Total Debt Service (TDS) ratios that determine maximum loan size.
What it applies to
Insured mortgages (less than 20% down) and uninsured mortgages at federally regulated lenders. Renewals at the same lender are generally exempt for straight renewals. Provincial credit unions are not directly subject to OSFI B-20.
Ratio limits
Insured mortgage ratios: GDS limit 39%, TDS limit 44%. Uninsured ratios are similar but vary by lender.