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  • Writer's pictureJames Mckeown

Navigating the New Mortgage Stress Test Rules in Ontario: What Buyers Need to Know

Updated: Dec 19, 2023

Author: James Mckeown

Date: Thursday, December 14, 2023

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The Ontario real estate market is constantly evolving, making it crucial for prospective homebuyers to stay updated on the latest regulations. A significant change that has garnered attention is the revised mortgage stress test rules. This blog will delve into what these changes entail and their implications for buyers across various price ranges.

Understanding the Mortgage Stress Test Ontario

The mortgage stress test is a tool to ensure buyers can afford their mortgages even if interest rates increase. It requires proving affordability at a rate significantly higher than the actual rate from lenders.

The Updated Rules

Effective from June 2021, the new qualifying rate for uninsured mortgages is either the mortgage contract rate plus 2% or 5.25%, whichever is higher. This is an increase from the previous rate of 4.79%, meaning buyers must demonstrate the ability to manage higher payments.

Impact on Different Buyer Segments

  1. Lower Price Range: First-time buyers often targeting more modestly priced homes may find their borrowing capacity reduced under the new rules, potentially leading to a shift in property choices or increased down payment requirements.

  2. Mid-Price Range: Those in the mid-price bracket might experience a decrease in purchasing power but generally have more flexibility with down payments and possibly existing equity.

  3. Higher Price Range: Buyers in this segment, despite typically having higher incomes and larger down payments, will also be affected, potentially needing to adjust their budgets or delay purchases to gather more funds.

Navigating the New Stress Test

  1. Boost Your Down Payment: Increasing your down payment can help counterbalance the reduced borrowing limit.

  2. Adjust Your Budget: Explore housing options in a slightly lower price bracket.

  3. Explore Diverse Lenders: Some lenders may offer more favorable conditions even under the new stress test framework.

  4. Enhance Your Financial Health: Improving your credit score and reducing existing debts can lead to better mortgage terms.

  5. Professional Guidance: A mortgage broker can offer tailored advice and solutions based on your specific circumstances.


While the revised mortgage stress test rules in Ontario pose challenges, they are not insurmountable. Strategic planning and professional advice can help navigate these changes effectively. As an expert in the Ontario mortgage market, I am here to assist you in understanding these developments and finding the most suitable approach for your homebuying journey.

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Need Expert Mortgage Advice?

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Author: James McKeown

Brokerage License Nova Scotia #3000075

Associate Mortgage Broker Licences #3000090

Brokerage License Ontario #10371

Mortgage Agent Level 2 License #M21004914


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