The Rate B.C. Buyers Qualify At: Contract Rate Plus 2 Points or 5.25%

One lender's sheet says "contract rate plus 200 basis points," and another says "contract rate plus 2 percentage points." A basis point is one hundredth of a percentage point, so 200 of them equal exactly 2 points. Both describe the same test. In 2026 you qualify at your contract rate plus 2 percentage points, or 5.25%, whichever is higher.

The qualifying rate decides how much you can borrow, even though you'll never pay it. If you can work it out yourself, you can shop in the right price range before you get attached to a home.

Your qualifying rate follows the rate you're offered

Your contract rate is the interest rate written into your mortgage, the one you'll actually pay. Here's an example with round numbers. If you're offered 4.5%, the lender checks whether you can afford payments at 6.5%. If you're offered 3%, adding 2 points gives 5%. That's below the floor, so you qualify at 5.25%.

The floor only comes into play when offered rates are low. Every time you get a better rate, your qualifying rate drops with it, which can stretch your budget a little.

The same test covers more than your mortgage

Under federal rules, the test applies whether your mortgage is insured (usually when you put less than 20% down) or uninsured. A home equity line of credit (a HELOC, a credit line secured by your home) is tested the same way. If you plan to set one up later for renovations or business cash flow, it will be checked against this same rule.

Your payment is based on the lower rate

Your monthly payment is calculated at your contract rate. The space between that rate and your qualifying rate gives you some breathing room if rates are higher when your term renews.

If you're self-employed, the income you show lenders has to cover payments at that qualifying rate. How that income is presented can make a real difference. If you'd like to see your own qualifying rate and buying range, send me your numbers and we'll go through them together.