Mortgage Stress Test Calculator
Find out if you can handle rate increases of 1-4%. Get a clear PASS or FAIL at the stressed rate, see your DTI across all rate scenarios, and plan for ARM payment shocks and income disruptions.
Your $360,000 loan at various rate levels. DTI above 43% is highlighted — most lenders cap at this level.
| Rate | Change | Monthly P&I | Total PITI | DTI | Status |
|---|---|---|---|---|---|
| 6.8% | Current | $2,335 | $2,793 | 40.3% | PASS |
| 7.8% | +1% | $2,579 | $3,037 | 43.4% | FAIL |
| 8.8% | +2% | $2,832 | $3,290 | 46.6% | FAIL |
| 9.8% | +3% | $3,093 | $3,551 | 49.9% | FAIL |
| 10.8% | +4% | $3,361 | $3,819 | 53.3% | FAIL |
| Rate | Total Housing | % of Take-Home | After Housing+Debts | Disposable Income | Survival |
|---|---|---|---|---|---|
| 6.8% (current) | $2,793 | 46.6% | $2,807 | $807 | OK |
| 7.8% (+1%) | $3,037 | 50.6% | $2,563 | $563 | OK |
| 8.8% (+2%) | $3,290 | 54.8% | $2,310 | $310 | OK |
| 9.8% (+3%) | $3,551 | 59.2% | $2,049 | $49 | OK |
| 10.8% (+4%) | $3,819 | 63.6% | $1,781 | -$219 | CRITICAL |
What Is a Mortgage Stress Test?
A mortgage stress test checks whether you can still afford your mortgage payments if interest rates rise significantly from today's level. Canada mandates it officially (qualifying at contract rate + 2%), and US lenders increasingly use it informally as part of prudent underwriting.
Why It Matters
Mortgage rates move in cycles. Buyers who stretched to the limit at low rates in 2020-2021 faced painful payment increases when rates rose to 7%+ by 2023. A stress test forces you to confront the question: what happens if rates are meaningfully higher? For fixed-rate borrowers, the risk is at refinancing time. For ARM borrowers, the risk is at every adjustment date.
The Key Metric: Debt-to-Income (DTI) Ratio
The stress test evaluates your total DTI — all monthly debt obligations divided by gross monthly income. Most lenders cap approvals at 43% DTI. If the stressed rate pushes your DTI above 43%, the test fails, indicating financial risk.
The Stress Test Formula
where r = (current rate + stress increment) / 12, n = loan term in months
Stressed PITI = Stressed Payment + Monthly Property Tax + Monthly Insurance
Stressed DTI = (Stressed PITI + Monthly Debts) / Monthly Gross Income × 100
PASS if Stressed DTI ≤ 43% (conventional threshold)
Canadian stress test uses the qualifying rate = max(contract rate + 2%, 5.25%). This calculator lets you set any stress increment — the standard approach is +2% to replicate the Canadian methodology.
Example: Stress Testing a $400,000 Purchase
Home: $400,000 | Down: $40,000 | Rate: 6.75% | Income: $95,000
| Loan Amount | $360,000 |
| Monthly P&I (6.75%) | $2,335 |
| Property Tax + Insurance | $458 |
| Monthly Debts | $400 |
| Current DTI | 38.4% — PASS |
| Stressed Rate (+2% = 8.75%) | — |
| Stressed P&I Payment | $2,831 |
| Stressed DTI | 44.8% — FAIL |
| Income Needed to Pass at 8.75% | $100,000+ |
This buyer passes at today's rate but fails the stress test — indicating vulnerability if rates rise or if they need to refinance at higher rates in the future.