DeedWorthGuide · Quebec

Borrowing Power and the B-20 Stress Test: How Much Can You Finance in 2026

Last verified: July 2026

In brief — A lender does not qualify you at your contract rate, but at a higher qualifying rate: the greater of your rate + 2% and a 5.25% floor. Your housing costs at that rate must not exceed 39% of your income (GDS ratio), and your total debts 44% (TDS ratio). On a rental property, part of the rent boosts your qualifying income — but the treatment varies from one lender to the next.

Before making an offer, the real question is not "what's the return?" but "is this deal financeable?". The answer lies in a mechanism framed by Guideline B-20 from the Office of the Superintendent of Financial Institutions (OSFI). Here is how it works in 2026, applied to a rental property.

The stress test: qualifying at a higher rate than yours

The lender simulates your payment not at the rate you negotiate, but at a qualifying rate:

Qualifying rate = the greater of (contract rate + 2%) and 5.25%.

Two examples:

• Rate negotiated at 4.7% → qualifies at 6.7% (since 4.7 + 2 = 6.7 > 5.25).
• Rate negotiated at 3.0% → qualifies at 5.25% (the floor, since 3.0 + 2 = 5.0 < 5.25).

The mortgage payment computed at that rate — not your actual rate — is what feeds the ratios below. That is what "stresses" your file: you must be able to absorb a rate increase.

The two ratios that decide: GDS and TDS

Your capacity is measured with two caps, expressed as a percentage of your gross income.

The housing costs in GDS combine: the mortgage payment at the qualifying rate, property taxes, heating, and 50% of condo fees if any. TDS then adds your other monthly obligations: car loan, line of credit, credit cards, support payments, other mortgages.

To be financed, you must pass both: GDS ≤ 39% and TDS ≤ 44%.

What changes for a rental property: rent counts

This is the point that sets a plex apart from a single-family home. Part of the rent from the leased units is recognized by the lender, which improves your ratios. Two methods coexist, and there is no universal rule — each lender applies its own:

• Add-back to income: a share of the gross rent is added to your income — often on the order of 50%. Your ratios fall because the denominator (income) rises.
• Payment offset: a share of the gross rent — often on the order of 80% — is subtracted directly from housing costs. The numerator falls.

Depending on the lender, the same acquisition may therefore "pass" or not. That is why a refusal at one lender does not mean a property is unfinanceable — the rent treatment changes the verdict.

A worked example

Take a triplex at $600,000, bought as an owner-occupant with 10% down (a $540,000 loan), amortized over 25 years. Rate negotiated at 4.7%, so qualifying at 6.7%. Borrower income: $90,000/year ($7,500/month). Property taxes $4,800/year, heating of the occupied portion $100/month. Two leased units at $1,300/month each, treated as add-back at 50%.

• Mortgage payment at the qualifying rate (6.7%, Canadian semi-annual compounding): about $3,700/month.
• Housing costs (GDS): 3,700 + 400 (taxes) + 100 (heating) = about $4,200/month.
• Qualifying income: 7,500 + 50% × $2,600 in rent = $8,800/month.
• GDS ≈ 48% → above 39%. The file does not pass as is.

The value of a model here is not just the verdict: it is quantifying what it would take to pass — a slightly higher personal income, a slightly larger down payment, or a lender applying the offset method rather than add-back. (Derived dollar figures are rounded and illustrative; the 5.25% floor, the 2% spread and the 39%/44% caps are the exact regulatory values.)

What raises or lowers your capacity

• The down payment. The larger it is, the lower the loan — hence the stressed payment — and the lower GDS drops. It is the most direct lever. See the down payment by plex type.
• Your other debts. They only touch TDS, but a car loan or a drawn line of credit can tip a borderline file. Paying them off before the offer frees up capacity.
• Rent treatment. Add-back vs offset: the difference is sometimes decisive on a rental property.
• The amortization. A longer amortization lowers the monthly payment and therefore the ratios (at the cost of higher total interest).
• The negotiated rate. Since the qualifying rate is floored at 5.25%, dropping below a 3.25% actual rate no longer reduces the qualifying rate — the floor takes over.

Estimate your capacity

DeedWorth applies exactly this mechanism — qualifying rate, GDS/TDS, rent treatment method — and, when a file fails, quantifies the minimum income or down payment needed to make the deal financeable. Analyze a property with DeedWorth →

FAQ

How is the qualifying rate calculated in 2026? Take the greater of your contract rate + 2% and a 5.25% floor. Example: a 4.7% rate qualifies at 6.7%; a 3.0% rate qualifies at 5.25%.

What is the difference between GDS and TDS? GDS (gross debt service) compares your housing costs to your income, capped at 39%. TDS (total debt service) adds all your other debts, capped at 44%. You must meet both.

Does rental income increase my borrowing power? Yes. Part of the rent from leased units is recognized, either added to income (add-back, often ~50%) or subtracted from housing costs (offset, often ~80%). The method used varies by lender.

Does the stress test apply to rental properties? Yes. The payment feeding the ratios is always computed at the qualifying rate, whether the property is owner-occupied or a pure rental.

Does a refusal mean the property is unfinanceable? No. Because rent treatment and internal rules vary from one lender to the next, the same property can be refused by one and approved by another. A mortgage broker compares these policies.

Read more

• Down payment for a plex: the 2026 rules
• Buying your first plex in Québec
• MLI Select: CMHC multi-unit financing

This article is for information only and is neither mortgage advice nor a pre-approval. Lenders apply their own rules, and regulatory parameters change; confirm your capacity with a lender or mortgage broker. Last verified: July 2026.