Starting June 1, 2021, the minimum qualifying rate used for both the insured and uninsured mortgage stress tests will be increasing. Whether you’re making a down payment of less than 20% or more than 20%, you will now have to prove you can afford payments based on your contract rate plus 2%, or 5.25%, whichever is higher. Currently, the minimum qualifying rate is 4.79%. The changes were announced by the Office of the Superintendent of Financial Institutions and the Department of Finance and will reduce the maximum mortgage you qualify for by between 4-5%. That means if your current maximum mortgage is $400,000, it will fall to $382,400 on June 1 if you’re applying with a federally regulated institution. The higher stress test will not apply to your purchase if it was made before June 1 (with a signed purchase to offer). Also, depending on your situation, we do have local lenders that are provincially regulated that still offer products with lower qualifying rates and requirements that may be a fit for your situation.
Feel free to contact us if you have any questions about these changes.