When does the 'stress test' or qualifying rate typically come into play for uninsured mortgages in Canada?

Question: When does the 'stress test' or qualifying rate typically come into play for uninsured mortgages in Canada?

Answer options:

• When the borrower has a down payment of less than 20%.
• When the mortgage is fixed for a term of five years or more. ✅ When the mortgage is subject to federal regulation for conventional mortgages.
• When the borrower elects for a variable rate mortgage.

Correct answer: When the mortgage is subject to federal regulation for conventional mortgages.

Explanation: The qualifying rate, or 'stress test,' applies to uninsured mortgages regulated by the Office of the Superintendent of Financial Institutions (OSFI) to ensure borrowers can withstand higher interest rates. This is typically for conventional mortgages with a down payment of 20% or more, regardless of the specific term or rate type, as per OSFI Guideline B-20.