The Stress Test — Why Your Maximum Is Lower Than You Think
The B-20 stress test requires all federally regulated lenders to qualify you at the higher of your contract rate + 2%, or 5.25%. At today’s agent rate of 4.79%, you’re qualifying at 6.79%. This single rule reduces your maximum mortgage by $80,000–$150,000 depending on your income.
A household earning $120,000 gross with no significant debt qualifies for approximately $595,000 at the stress-tested rate — versus approximately $735,000 at the actual contract rate. Plan your home search around the stress-tested number.
How Debt Changes Your Maximum
Lenders use two ratios to cap your mortgage: GDS (housing costs ÷ income, max 39%) and TDS (all debts ÷ income, max 44%). Every monthly debt payment reduces your maximum mortgage. A $700/month car payment reduces qualifying power by approximately $110,000. A $15,000 credit card balance — counted at 3%/month regardless of your actual payments — reduces it by approximately $71,000.
The most effective pre-application action: pay off revolving credit card debt. Dollar-for-dollar, it’s the most efficient way to increase your maximum mortgage.
Ontario Mortgage Qualification — Common Questions
Maximum Mortgage FAQ — Stress Test & Qualification
The B-20 stress test, debt ratios, and what actually determines your maximum in Ontario. The answers lenders don’t always explain upfront.
With 20% down ($160,000) and no significant other debt, you need approximately $150,000–$160,000 in gross household income to qualify for a $640,000 mortgage after the B-20 stress test at 6.79%.
Yes — without exception at federally regulated lenders (banks, monolines, federal credit unions). Provincial credit unions are exempt from B-20 and qualify borrowers at their actual contract rate, which can increase your maximum mortgage by $80,000–$160,000 at the same income.
680+ for best rates and maximum lender options. 600–679 qualifies at most A-lenders with minor rate premiums. Below 600: B-lenders are available. Build toward 680 before applying for the widest range of options.
Yes — adding a qualified co-borrower increases combined income and therefore maximum qualifying amount. Their debts also count in the TDS calculation. A co-borrower with $80,000 income and minimal debt can add $300,000–$400,000 in mortgage qualifying power.
Still Have Questions?
Not seeing your exact situation here? Let’s take a look at your numbers and walk through your options step by step.
