Contract rate versus qualifying rate
The contract rate is the interest rate used for the mortgage you pay. The qualifying rate is a higher test rate used to assess whether the household could handle higher borrowing costs. For example, a 4.50% contract rate plus two percentage points produces a 6.50% qualifying rate.
- 4.50% contract rate → 6.50% qualifying rate
- 3.00% contract rate → 5.25% floor
- A higher test rate produces a higher qualifying payment for the same mortgage
How it changes affordability
The calculator first determines how much monthly housing cost fits under the GDS and TDS reference limits. It then converts the mortgage-payment portion into a mortgage amount using the qualifying rate. As the qualifying rate rises, the mortgage amount supported by the same payment falls.
Use scenarios, not a single prediction
Try the current expected rate and then a higher rate to see how sensitive the purchase-price estimate is. This is a planning exercise; renewal rules, insured and uninsured mortgages, and individual lender policies can differ or change.
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