The qualifying rate is a maximum, not an average.

At a 4.40% five-year rate, 4.40 plus 2 is 6.40, and 6.40 is higher than 5.25, so the test uses 6.40. The 5.25% floor only decides the rate when the contract is under 3.25%. A borrower who finds a 3% contract still qualifies at 5.25%, not at 5%. That is the entire rule our calculator applies.

The higher rate is used to compute the payment that goes into GDS and TDS. You still pay the contract rate if you are approved. The gap between those two payments is why the income required looks detached from the payment you budgeted.

Straight switches at renewal, same lender terms, same amount, have been carved out of the test in specific cases since late 2024. A new purchase has not. If you are buying, assume the test applies at a federally regulated lender. Credit unions under provincial rules can differ. This page does not quietly drop the test because a headline said it was eased.