The mortgage stress test makes you prove you could afford your payments at a higher rate than the one you are offered. In 2026 that rate is the higher of 5.25 per cent or your contract rate plus two percentage points.
At today’s best 5-year variable rate of 3.40 per cent, you are tested at 5.40 per cent. A household earning $150,000 with no other debts qualifies for a mortgage of about $715,000. This page shows how that number is reached, what moves it, and lets you work out your own.
Work out your number
Uses the 39 per cent housing and 44 per cent total debt limits. Mortgage insurance premiums and lender policies are not included.
The result is the largest mortgage the standard ratios allow. A lender may approve less, depending on your credit, your job history and the property. Treat it as a ceiling for planning, then get a written pre-approval.
How the test works
Lenders measure two ratios, both calculated with the stress test rate and not your real one.
- Gross debt service, limit 39 per cent. Your mortgage payment, property tax, heat and half of any condo fee, divided by your gross monthly income.
- Total debt service, limit 44 per cent. All of the above plus your other debt payments: car loans, student loans, lines of credit and credit card minimums.
Whichever ratio you hit first sets your limit. For buyers with little other debt it is the 39 per cent housing limit. For buyers with a car payment and loans it is usually the 44 per cent limit.
The test rate today
| Mortgage | Rate offered | Rate you are tested at |
|---|---|---|
| Best 5-year variable | 3.40% | 5.40% |
| Big-bank variable | 3.65% | 5.65% |
| Best 5-year fixed | 4.34% | 6.34% |
| Big-bank fixed | 4.74% | 6.74% |
The 5.25 per cent floor only matters when rates are below 3.25 per cent. At current rates, everyone is tested at their own rate plus two.
How much you can borrow, by income
Each row assumes no other debts, $550 a month for property tax and heat, no condo fee and a 25-year amortization.
| Household income | Variable at 3.40% | Fixed at 4.34% | Variable qualifies you for |
|---|---|---|---|
| $80,000 | $339,000 | $311,000 | $29,000 more |
| $100,000 | $447,000 | $409,000 | $38,000 more |
| $125,000 | $581,000 | $532,000 | $49,000 more |
| $150,000 | $715,000 | $655,000 | $60,000 more |
| $200,000 | $984,000 | $901,000 | $83,000 more |
| $250,000 | $1,253,000 | $1,147,000 | $105,000 more |
Add your down payment to get the price you can afford. To buy the average GTA home at $993,410 with 20 per cent down, you need a mortgage of $794,728. On the variable rate that takes a household income of roughly $165,000. On the fixed rate it takes about $178,000.
Why a variable rate qualifies you for more
This surprises people. Because the test adds two points to whatever rate you choose, a lower rate means a lower test rate. Choosing the 3.40 per cent variable over the 4.34 per cent fixed raises your borrowing limit by about nine per cent.
That is a reason some buyers pick variable, and it deserves caution. The test is checking that you could handle higher payments. If you borrow the maximum on a variable rate and rates rise by a full point, you will be making close to the payment the test imagined. Our page on 5-year variable mortgage rates shows what each rate increase costs.
What lowers your limit
| Change | Effect on a $150,000 household |
|---|---|
| No other debts | $715,000 |
| $500 a month in debt payments | $715,000. The housing limit still binds |
| $800 a month in debt payments | $686,000 |
| A $600 condo fee | $666,000 |
| Choosing the 4.34% fixed rate | $655,000 |
- Debt payments matter once they are large enough to make the 44 per cent limit the binding one. A $700 car payment can cost you $25,000 or more of mortgage.
- Condo fees count at half their amount, so a condo with high fees supports a smaller mortgage than a house at the same price.
- Credit card and line of credit balances are counted at a set percentage of the balance, even if you pay them off monthly. Pay them down before you apply.
What raises it
- A longer amortization. First-time buyers and buyers of newly built homes can take a 30-year amortization on an insured mortgage. For the $150,000 household it lifts the limit from $715,000 to about $775,000. You pay more interest over the life of the loan.
- A bigger down payment. It does not change the mortgage you qualify for, but it raises the price you can pay.
- Rental income. Rent from a legal second unit can be added to your income, in whole or in part depending on the lender. In Brampton the unit must be registered. See our guide to a legal basement apartment in Brampton.
- A co-borrower. A second income on the application raises the limit. Everyone on the mortgage is fully responsible for it.
- Paying off a loan. Clearing a car loan before you apply removes its payment from the calculation.
When the test does not apply
- Renewing with your current lender. You are not re-tested.
- Switching lenders at renewal. A straight switch, with the same balance and the same amortization, is exempt. This has applied to uninsured mortgages since late 2024 and gives you room to shop for a better rate at renewal.
- Refinancing. If you increase the balance or extend the amortization, you are tested again.
- Some credit unions. Provincially regulated credit unions are not bound by the federal rule, though many apply their own version.
Other limits that sit beside the stress test
- Minimum down payment. Five per cent of the first $500,000 and 10 per cent of the rest, up to a price of $1.5 million. Above $1.5 million you need 20 per cent.
- Mortgage insurance. Required when you put down less than 20 per cent. The premium is added to the mortgage.
- Closing costs. Lenders expect you to show cash for these on top of the down payment, often 1.5 per cent of the price. Our land transfer tax examples show the largest item.
What this means in the GTA
A household earning $150,000 with $100,000 saved can look at homes up to about $815,000 on the variable rate. In August 2026 that covered an average semi-detached or townhouse in Brampton, a condo townhouse in Mississauga and a freehold townhouse in Milton. It did not reach a detached house in any of the three. Our comparison of what a budget buys in Brampton, Mississauga and Milton lets you set your own number.
Once you have a price, the mortgage payment calculator gives the real monthly payment.
Questions buyers ask
What is the mortgage stress test rate in 2026?
The higher of 5.25 per cent or your contract rate plus two percentage points. At a 3.40 per cent variable rate you are tested at 5.40 per cent.
How much mortgage can I get on a $100,000 income?
About $447,000 on the best variable rate and $409,000 on the best fixed rate, with no other debts and a 25-year amortization.
Does the stress test apply at renewal?
Not if you renew with your lender, and not on a straight switch to another lender with the same balance and amortization.
Does the stress test apply if I put 20 per cent down?
Yes. It applies to insured and uninsured mortgages at federally regulated lenders.
Do I pay the stress test rate?
No. It is used only to decide how much you can borrow. Your payments are based on your actual rate.
Sources and method
- Stress test rule and qualifying rate: Ratehub.ca, October 2, 2026, reflecting federal guideline B-20 and mortgage insurance rules.
- Mortgage rates: Ratehub.ca, October 2, 2026.
- GTA and city prices: Toronto Regional Real Estate Board data for August 2026.
- Borrowing limits calculated by Local Toronto using 39 and 44 per cent ratios, with interest compounded semi-annually.
Local Toronto is not a mortgage lender or broker. This page is general information, not mortgage advice. A lender or broker will confirm what you qualify for. HomeLife Landmark Realty Inc., Brokerage.