Qualifying Rate
Taux admissible in French
Quick definition
The qualifying rate is the interest rate a lender must use to test your mortgage application, not the rate you actually pay. In Canada, the minimum qualifying rate is the greater of your contract rate plus 2 percentage points or 5.25%.
The rate you are tested at, not the rate you pay
Canada's mortgage stress test works by running your application at an inflated rate called the minimum qualifying rate (MQR): the greater of your contract rate plus 2 percentage points, or 5.25% (as of July 2026). Offered 4.4%? You are tested at 6.4%. Offered 2.9%? The 5.25% floor applies. Pass the test and you still pay your contract rate; the qualifying rate never appears on a single payment.
The point is a buffer: proof, before the lender hands over the money, that your budget survives higher rates at renewal or a jump in a variable rate.
Who sets it
Two bodies own the rule. OSFI, the federal banking regulator, sets the MQR for uninsured mortgages (20% or more down) through its underwriting guideline. The Department of Finance sets the matching rule for insured mortgages. The two have moved in lockstep since 2021, so in practice one formula covers nearly every mortgage from a federally regulated lender.
Where it enters the math
The qualifying rate does its work inside your debt service ratios. The lender calculates a hypothetical mortgage payment at the qualifying rate, then feeds that payment, not your real one, into your GDS and TDS calculations. A higher qualifying rate means a bigger hypothetical payment, and therefore a smaller maximum loan on the same income. One recent softening: since November 2024, borrowers switching an uninsured mortgage to a new lender at renewal, with no new money, no longer have to requalify at the MQR. The stress test entry covers the full story.
In Canada
The 5.25% floor has stood since June 2021, and OSFI reviews the MQR at least annually, typically each December (as of July 2026). Provincially regulated credit unions are not bound by OSFI's guideline and some apply more flexible tests, which is one reason a borrower declined by a bank can sometimes qualify at a credit union.
Worked example
Priya is offered a five-year fixed rate of 4.39% on a $500,000 mortgage with a 25-year amortization. Her real payment would be about $2,737 a month, but her lender must test her at 6.39%, where the payment is about $3,316. Her income has to support the $3,316 figure inside the GDS and TDS limits even though she will never pay it. In effect, the qualifying rate trims her maximum loan by roughly 15% to 20% compared with testing at the contract rate.
Reviewed by Alexandre Bernier, CFP®, CIM®, PFP®·Updated July 2026