You do not qualify at the rate you are offered. You qualify at your rate plus two percentage points, or 5.25%, whichever is higher. That single rule sets the ceiling on almost every Canadian purchase.
The qualifying rate
| Your rate | Qualifying rate | Why |
|---|---|---|
| 3.00% | 5.25% | Floor applies |
| 4.19% | 6.19% | Rate plus two points |
| 5.49% | 7.49% | Rate plus two points |
The lender then tests two ratios at that higher rate. GDS — gross debt service — is housing cost divided by gross income, capped near 39%. TDS — total debt service — adds every other debt payment, capped near 44%. Housing cost means the mortgage payment, property tax, heating, and half of any condo fee.
What it costs you in price
A household earning $120,000 with $100,000 down and no other debt might carry a payment based on 4.19% comfortably. Tested at 6.19%, the qualifying payment rises by roughly a quarter, and the approved price falls by a similar share. The test is generally worth about 20% of purchasing power.
Run it on your own numbersHome affordabilityBack-solve your maximum price and see which ratio binds.The lever most buyers miss
If TDS is the binding ratio, clearing a car loan raises your maximum price more than saving another $10,000 ever will. A $550 monthly car payment consumes about $110,000 of mortgage capacity at current rates. Check which ratio binds before you decide where to put your next dollar.
Down payment minimums
- 5% on the first $500,000 of price.
- 10% on the portion between $500,000 and $1,500,000.
- 20% on any home priced above $1,500,000 — these cannot be insured at all.
Anything under 20% down requires mortgage default insurance. At 5% down the premium is 4.00% of the loan, added to the mortgage rather than paid up front. On a $600,000 purchase with $30,000 down that is $22,800 of premium financed over the full amortization.
Renewals are the exception
Since 2024, switching lenders at renewal on a straight transfer — same balance, same amortization — no longer triggers a fresh stress test. If you are renewing rather than buying, you can shop the whole market.
Run it on your own numbersMortgage paymentSemi-annual compounding, CMHC premium, and the equity you build each year.Written against published 2026 federal and provincial figures. General information, not financial, tax, or legal advice — see the methodology and disclaimer.