Mortgage Stress Test Calculator
See how your mortgage payment holds up if rates rise.
How this is calculated
The standard loan-amortization formula computes your monthly payment at your current rate, then again at +1, +2, and +3 percentage points. Each payment is compared to your income to flag the first scenario where it exceeds 35% of gross income. This mirrors the approach lenders in markets like the UK and Canada are required to take when assessing whether to approve a loan — testing affordability not just today, but against a plausible future rate environment.
Using this calculator's defaults — a $400,000 loan at 5.5% over 30 years, against $7,000 of monthly gross income — the current payment is about $2,271, comfortably under the 35% affordability ceiling of $2,450. But at just +1 percentage point (6.5%), the payment rises to roughly $2,528 — already over that ceiling. This shows how a modest rate rise can turn a comfortably affordable loan into a tight one. Once you know your maximum comfortable payment, use the Maximum Affordable Property calculator to see the loan size and property price that keeps you within it, and the Mortgage calculator for the full amortisation schedule at your actual rate.
Frequently asked questions
- Why stress-test at +1/+2/+3 percentage points?
- Many lenders require borrowers to qualify at rates higher than today's, to ensure the loan stays affordable if rates rise — this shows you the same math.
- What happens when a scenario "breaches" the threshold?
- 35% of gross income going to a single payment is a commonly used affordability ceiling. Breaching it in a higher-rate scenario is a signal the loan may become uncomfortably tight if rates rise that far.
- What is a mortgage stress test?
- A mortgage stress test checks whether you could still afford your loan payment if interest rates rose after you take it out — lenders (and this calculator) recalculate the payment at a higher rate and compare it against your income to see if the loan would still be manageable.
- What rate buffer do UK and Canadian lenders typically use?
- Canadian lenders require borrowers to qualify at the higher of the contract rate plus 2 percentage points, or a set minimum benchmark rate. UK lenders typically apply their own affordability stress rate, commonly a few percentage points above the offered rate, as part of mortgage regulation.
- What happens if I fail a stress test?
- If a lender's stress test shows you couldn't afford the loan at a higher rate, they will typically reduce the maximum amount they'll lend you, rather than reject the application outright — you may need a smaller loan, a bigger deposit, or a longer term to pass.
- How does the stress test affect how much I can borrow?
- It effectively lowers your real borrowing capacity below what your current-rate payment alone would suggest, since the loan has to remain affordable at the stressed rate too. See the Maximum Affordable Property calculator for how income translates into a borrowing limit before stress-testing.
- Do all countries require stress tests?
- No — mortgage stress testing requirements vary by country and even by lender. The UK and Canada have well-known regulatory stress-test frameworks; other markets rely more on standard debt-to-income underwriting without an explicit rate-buffer requirement.
- How is the stressed payment calculated?
- The same loan amortisation formula used for your normal payment is recalculated using a higher interest rate (your current rate plus 1, 2, and 3 percentage points), keeping the loan amount and term the same — only the rate changes, so you can see exactly how much the payment would rise.