This is the rule that decides your buyer's maximum approved purchase price before they ever get to negotiate one — and the exemption that changed who has to clear it.
Headline figure
Contract rate + 2%, or 5.25% — whichever is higher
OSFI's Minimum Qualifying Rate (MQR): a federally regulated lender must qualify a residential mortgage borrower at “the greater of the mortgage contract rate plus 2% or 5.25%”. The 2% is described as a safety buffer; the 5.25% is a hard floor for broader economic risk, regardless of how low the contract rate is.
What the data says
The MQR exists to check whether a borrower could still service their mortgage payment if rates rose after closing — it is a stress test against a higher hypothetical rate, not against the rate the borrower will actually pay. A borrower qualifies at the stress rate but is billed at their real contract rate, which is why the test lowers the maximum a buyer can qualify to borrow without changing what a lender actually charges.
Worked illustration only, using a placeholder rate rather than any published one: a buyer offered an illustrative 4.79% contract rate is not qualified at 4.79%. They are qualified at the greater of 4.79% plus 2% (6.79%) or 5.25% — here, 6.79%, since it is the higher of the two. A lower contract rate can still leave a buyer qualifying at well above what they will actually pay, because the 2% buffer moves with the contract rate while the 5.25% floor does not.
The November 21, 2024 change removed OSFI's prescribed MQR specifically for uninsured borrowers doing a straight switch — moving an existing mortgage to a new institution at renewal, with no increase to the amortization period or the loan amount. It does not apply to a new purchase, a refinance, or a switch that increases amortization or loan size; those transactions still clear the same contract-rate-plus-2%-or-5.25% test. The exemption is narrow and renewal-specific, not a general loosening of the stress test.
The 4.5x LTI limit is a separate, portfolio-level constraint on the lender, introduced alongside the switch exemption but measuring something different: not whether an individual borrower can handle a higher rate, but what share of a lender's total new uninsured lending is allowed to sit above a 4.5-times-income multiple. OSFI sets that allowable share per institution rather than publishing one fixed national percentage, and institutions have reported against it quarterly since each institution's own 2025 fiscal year began. A borrower does not see this limit directly the way they see the MQR — it can still affect whether a specific lender has room left to approve a high-LTI file in a given quarter.
Both rules move the same buyer's ceiling from two different directions: the MQR sets what an individual borrower can qualify for; the LTI limit can constrain what a specific lender is still willing to originate at the high-multiple end, independent of any one borrower's own qualification.
A rate hold or a rate move by the Bank of Canada (see rate decisions and the showings that follow) changes the contract rate lenders are offering, which changes the “contract rate plus 2%” side of the MQR calculation — but the 5.25% floor does not move with it, so in a lower-rate environment the floor, not the buffer, increasingly decides what a buyer can qualify to borrow.
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