Mortgage Stress Test: How Does It Work in Canada?

Canada's mortgage stress test requires borrowers to qualify at the higher of 5.25% or their mortgage rate plus 2%, ensuring they can afford payments if rates rise. It affects borrowing capacity by impacting debt service ratios (GDS/TDS). First-time buyers face challenges due to limited borrowing power. Passing tips include improving credit, reducing debt, larger downpayments, and longer amortizations. Non-federally regulated lenders may not require the test but often charge higher rates.