Mortgage rate changes

A New Stress Test Is Coming...


The government has proposed to increase the stress test as of June 1, 2021.  



What is the stress test?

Currently, when applying for a mortgage you have to qualify using an interest rate of 4.79% or your actual interest rate + 2%, whichever is higher.  These new proposed changes will increase that qualifying rate to 5.25%...but only for some people.  

Who does this affect?

It only affects you if you are looking to refinance, buy a home over 1M+, buy a non-owner occupied single unit rental property, or if looking for a mortgage amortization over 25 years.  

It does not affect you if you are buying a home with less than a 20% down payment or looking to switch your mortgage to another lender if your home value is less than 1M, with an amortization of 25 years or less. You will still qualify using a 4.79% interest rate.

What does this actually mean?

It means the amount you will qualify for will be reduced by 4%-5%.  For example, if your maximum qualification is 800k purchase using a 30yr AM, this will be reduced to approximately 760k.