What is the mortgage stress test in Canada?
Canada's stress test requires lenders to qualify borrowers at the higher of the contract interest rate plus 2%, or 5.25% (the minimum qualifying rate set by OSFI). Even if your actual rate is 4.5%, you must qualify as if paying 6.5%. This ensures borrowers can handle rate increases. The stress test applies to all federally regulated lenders for both insured and uninsured mortgages.
What are GDS and TDS ratios?
Gross Debt Service (GDS) ratio is your monthly housing costs (mortgage principal and interest, property taxes, heating, and 50% of condo fees) divided by gross monthly income. TDS (Total Debt Service) adds all other monthly debt payments. Canadian lenders generally require GDS ≤32% and TDS ≤44%, though some lenders allow slightly higher ratios for strong borrowers.
How much down payment do I need in Canada?
For homes under $500,000: minimum 5% down. From $500,000 to $999,999: 5% on the first $500,000 and 10% on the remainder. For $1,000,000 and above: 20% minimum (mortgage insurance not available). Putting down less than 20% requires CMHC mortgage default insurance, which adds a premium of 2.8–4% of the mortgage amount.