Qualifying Rate

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Also referred to as the Benchmark Qualifying Rate, it’s the rate lenders use to determine how much of a mortgage payment you can afford.

On insured mortgage, you must prove you can afford a payment at the Mortgage Qualifying Rate (MQR). This rate equals the mode average of the Big 6 banks’ 5-year posted rates.

On an uninsured mortgage, you must prove you can afford a payment at the Mortgage Qualifying Rate (MQR) or your contract rate plus two percentage points, which ever is higher.

Lenders test borrowers at these higher rates to ensure they can afford their payments if rates rise.

Spy Tip: There’s no way to get around the qualifying rate if you’re putting down less than 20% and need an insured mortgage. But if your mortgage is conventional and the qualifying rate is keeping you from getting a higher loan amount, consider a credit union which offers less stringent qualifying rules. Another strategy is opting for a longer amortization.

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