The Mortgage Stress Test: Why Your Number Came in Lower

Lenders don't qualify you at the rate you'll actually pay. They qualify you at a higher one. That's why the bank's number often comes in lower than you expected.

The short answer: You don't pay the stress test rate. It's only used to check whether you qualify. Your actual contract rate sets your payment.

How it's calculated

For most mortgages, you have to qualify at whichever is higher:

Your contract rate plus 2%, or
5.25%

Example: If your rate is 4.5%, you qualify at 6.5%, because that's higher than 5.25%. Your actual payment is still based on 4.5%.

What else the lender looks at

Your verified income
Your other debts and their payments
Property taxes, heating and condo fees
The property and your down payment

Paying down credit cards or a car loan before you apply can raise what you qualify for.

Different deals, different rules

Purchases, refinances and straight switches at renewal can be treated differently. Some alternative lenders don't use the same qualifying rules as the banks, which is one reason a broker can sometimes get you approved for more.

Run your own stress test

Passing the lender's test doesn't mean the full approval is comfortable. Ask yourself: could you handle a higher payment at renewal, a drop in income, or a big repair?

Related guides

Let's talk it through

Book a call and we'll go over your options with you.

Alberta: 587-900-0036 | BC: 604-200-3228

These guides are general information, not a mortgage offer or personal advice. Every approval depends on lender review of your income, credit, property and documents. Elevate Lending, powered by BRX, serves clients in Alberta and British Columbia.