A federal requirement that all mortgage applicants must qualify at a rate higher than their actual contract rate. The qualifying rate is the greater of the contract rate plus 2%, or the Bank of Canada's benchmark rate. This applies to all borrowers, even those with a 20%+ down payment.
Why It Matters
The stress test limits how much you can borrow, regardless of how strong your finances are. It was introduced to ensure Canadians can handle rate increases. In practice, it means you might qualify for less than you expect -- so get pre-approved early and set realistic expectations.
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