Homebuyers needing to finance their home are required to pass a stress test, and it's about to become harder to pass. Here's what you need to know about the stress test as it stands currently and what is about to change.
What is the Stress Test?
Introduced in 2018, the stress test for insured mortgages requires applicants to meet criteria that prove they could continue to make mortgage payments based on higher interest rates. For a stress test, mortgage lenders calculate the Gross Debt Service and Total Debt Service ratios to decide if applicants have a high enough income and low enough debt load to make higher mortgage payments should rates increase.
Changes to the Stress Test
"Regulators plan to ratchet up the country's dreaded…