The interest rate used to determine if you can afford a mortgage, which is higher than your actual rate.
The qualifying rate (also called the benchmark rate) is the higher of 5.25% or your contract rate plus 2%. This is used in the stress test calculation. Your actual payments will be based on your contract rate, but you must prove you can afford the qualifying rate payments. This is calculated using Gross Debt Service (GDS) and Total Debt Service (TDS) ratios.
Related terms: Mortgage Stress Test | Gross Debt Service (GDS) Ratio | Total Debt Service (TDS) Ratio