Short answer
For uninsured mortgages at federally regulated lenders, the prescribed qualifying rate remains the greater of the contract rate plus 2% or 5.25%, subject to the straight-switch renewal exception.
The client problem behind this rule
The client can afford the payment shown at the offered rate but is told the mortgage amount is lower than expected. The missing piece is often that the lender qualifies the payment at a higher rate.
What the official source confirms
OSFI publishes the minimum qualifying rate for uninsured mortgages. The current formula is the greater of 5.25% or the mortgage contract rate plus 2%. This is a qualification calculation, not necessarily the client’s payment rate.
What this does not mean
The formula does not tell us the final approved amount. Lenders also apply their own debt-service ratios, income acceptance, credit rules, property standards and exception authority. Alternative, MIC and private lenders may use different qualification approaches, pricing and risk limits; they should not be presented as automatic substitutes.
A practical Ontario example
Illustration only: If the contract rate is 4.60%, the qualifying rate under this formula is 6.60%, not 5.25%. The lender calculates the qualifying payment at the higher rate and then tests the client’s total obligations.
Practical mortgage routes to explore
Before changing the purchase price, review income treatment, debts, rental-income method, amortization and property type. A conventional A solution may still exist through a lender with a better fit. If not, compare the cost and exit plan of an alternative route rather than focusing only on the rate.
Questions to ask before relying on this rule
- Is this rule currently in force, future-dated, proposed or expired?
- Does it apply to an insured mortgage, an uninsured mortgage, a tax program or only a regulated institution?
- Which facts in my file have been verified, and which are still assumptions?
- What remains subject to the lender’s own income, credit, property and exception policy?
- If the preferred A-lender route does not work, what would an alternative/B, MIC or private option cost—and what is the exit plan?
Rajiv’s broker review
The official rule is the starting boundary, not the complete approval answer. I would verify the client’s timing, purpose, property, income, credit and available documents, compare the relevant lender policies, and then stress-test the practical options. A lower-rate route is not better if the client cannot complete the transaction or exit it safely.
Would a second opinion help? Ask Rajiv for a mortgage rule and strategy review. Bring the rule, deadline and concern so the conversation can focus on what is confirmed, what is missing and what may still be possible.