The stress test is a new rule requiring banks to qualify borrowers at the higher of the Bank of Canada benchmark rate or their contract rate plus two percent. Even if your actual mortgage payment is based on a lower rate, lenders must confirm you can afford payments at this higher qualifying rate.
Generally speaking, the impact is about 20 percent. For example, if you previously qualified for a $400,000 mortgage, under the new guidelines you would likely qualify for approximately $320,000 on the same property.
Not necessarily. Qualification depends on your personal finances, including income, debts, credit, and existing rental income. The effect varies by individual, so both new and experienced investors need a tailored strategy to continue growing.
Pay attention to unsecured lines of credit, large car leases or financed vehicles, and big balances on secured lines of credit. Lenders often calculate payments on these debts at higher rates than what you actually pay, which can significantly reduce how much mortgage you qualify for.
Ensure every dollar of rental income you receive—from basement suites, room rentals, or Airbnb—is reported on your tax returns. Additionally, work with mortgage professionals who can place your deal with lenders that factor in 80 to 100 percent of that rental income rather than only 50 percent.
