What is the mortgage stress test and how much does it cost me?

The test exists so that a rate increase at renewal does not put a borrower underwater. Your payment is recomputed at the qualifying rate for approval purposes, even though your real payment is lower, and because the payment feeds the debt service ratios a higher qualifying rate means a lower approved amount.

There are two separate rules doing this, which matters if anyone tells you the test does not apply to them. For an uninsured mortgage at a federally regulated lender, the requirement is OSFI Guideline B-20. For an insured mortgage, the minimum qualifying rate is a condition of the federal guarantee that stands behind the insurance, so it follows the insurance rather than the lender.

That is why a provincially regulated credit union is a partial exception and not a loophole. It is not bound by B-20, so it can set its own test on an uninsured mortgage. If the mortgage it writes you is insured, the insured minimum qualifying rate still applies, because it travels with the insurance.