What Is The Stress Test Rate?

In response to runaway home prices, the Federal Government implemented new qualification guidelines starting January 1st, 2018.  Borrowers are required to qualify for financing using a “stress-test” rate of 2% higher than the contract rate.

Putting less than 20% as a down payment?

Qualification rate is the Bank of Canada rate – 5.14% (As of April 5th, 2018)

Putting down more than 20% as a down payment?

Qualification is greater of Bank of Canada rate or contract rate + 2%.

If you put more than 20% down, you have the ability to push your amortization to 30 years.  For most, this allows you to qualify for a higher purchase price but has higher interest rates.