What First-Time Buyers Should Know About the Mortgage Stress Test

If you’re starting your home search, you’ve probably heard about the mortgage stress test. It sounds a little intimidating, but it’s actually pretty straightforward once you break it down.

Let’s walk through it together 👇

So, what is the stress test?

It’s a rule set by the government to make sure buyers can still afford their mortgage if interest rates go up. Basically, your lender has to qualify you at a higher rate — not just the one they’re offering you.

For example:
If your actual mortgage rate is 5.3%, they’ll test you as if you’re paying 7.3% (that’s your rate + 2%). If that number is still under the government minimum of 5.25%, then 5.25% is used instead.

It’s not the rate you’ll pay — just a way for lenders to double-check that you’d be able to handle a rate increase in the future.

Why does it matter?

Because it affects how much home you can afford. Even if your credit’s strong and your income is solid, the stress test might shrink your approval amount a bit — sometimes by tens of thousands.

That’s why buyers often say, “Wait, I thought I could afford more…”
It’s not just about what you can pay — it’s about what the bank is comfortable lending based on risk.

Who has to do it?

Pretty much everyone:

• First-time buyers

• People with less than 20% down

• Buyers with 20%+ down

• Renewals and refinances (especially if you’re switching lenders)

The only exception? If you’re renewing with the same lender, the stress test doesn’t apply. But if you’re moving your mortgage to a new bank or broker — yep, you’ll be tested again.

Can you skip it?

Not really. Unless you’re working with a credit union or private lender (and even some of them use similar standards), it’s part of the process.

How to prepare for it

✅ Pay down debt — credit cards, car loans, lines of credit
✅ Don’t open new accounts or make big purchases before applying
✅ Get pre-approved early so you know what you’re working with
✅ Work with a good mortgage broker who can help you shop the best rates and options

Final Thoughts

The stress test isn’t here to make things harder — it’s here to protect buyers from getting in over their heads if rates go up.

If you’re not sure how it applies to you, or you just want to talk through your numbers, I’ve got you. Let’s break it down and make sure you’re set up with a clear game plan.