What is a mortgage stress test?

A mortgage stress test checks whether your budget survives realistic worst-case scenarios like income loss, higher rates, escrow increases, and major emergency repairs.

How many months of runway should I have?

Many homeowners aim for 6+ months of runway under stress (savings that cover the burn rate when income drops or costs rise).

Is bank approval the same as affordability?

Not always. Bank underwriting focuses on qualification rules; affordability is about survival during stress and how quickly savings is consumed.

What’s a breakpoint?

A breakpoint is the smallest rate hike or income loss that flips your monthly margin negative, meaning you start burning savings.

Can I Really Afford My Mortgage?

Approval isn’t the same as safety. A mortgage stress test answers a different question: “If something goes wrong, how long do I last?”

What “afford” really means

Most people think affordability is whether the payment “fits” today. Real affordability is whether your plan survives common shocks: income changes, taxes/insurance increases, and expensive home repairs. This matters because mortgage failure usually happens through a slow squeeze: the payment stays the same, but everything else becomes more expensive while cash buffers shrink.

The 3 numbers that predict survival

Runway: how many months your savings can cover your burn rate during stress.
Payment pressure: housing cost as a share of stressed income (not your best month).
Breakpoints: the smallest income drop or rate hike that flips your monthly margin negative.

How to run a mortgage stress test (in 60 seconds)

Enter your baseline mortgage details (loan amount, rate, term).
Add escrow items (taxes, insurance) and HOA if relevant.
Enter your net monthly income and non-housing monthly expenses.
Enter liquid savings (cash you can actually use).
Stress it: set an income drop, rate hike, emergency cost, and expense spike.

Then read the results: runway, breakpoints, and what actions improve resilience.

Stress scenarios you should always test

You don’t need a dozen scenarios. You need the ones that happen all the time:

Income disruption: job loss, reduced hours, commission drop, partner income loss.
Rate exposure: ARM resets, refinance risk, buying again soon, or a tight margin.
Escrow shock: property taxes or insurance jumps (often $100–$500+/mo swings).
Emergency repairs: HVAC, roof, plumbing, water damage, deductible events.

What “good” looks like (practical targets)

Stable margin: even after stress, you don’t burn savings every month.
Runway: 6+ months under stress is a common resilience target (varies by job stability).
Low sensitivity: a small rate hike or modest income hit shouldn’t instantly break you.

If your stress test is bad, fix the right lever

People panic and try to “optimize everything.” Don’t. Most improvements come from just three levers:

Increase runway: save more, delay big purchases, reduce optional spending temporarily.
Reduce burn: cut monthly expenses that scale with lifestyle (subscriptions, vehicles, dining).
Reduce housing pressure: prepay principal (long-term), refinance later, or adjust housing choice.

FAQ

Is bank approval the same as “safe”?

Not necessarily. Underwriting focuses on qualification ratios and documentation rules. A stress test focuses on how quickly your budget fails when reality changes.

What income should I use?

Use net monthly income you can rely on, not a best-case month. If your income is variable, consider testing a conservative baseline and then apply stress on top.

Should I count retirement accounts as savings?

Usually no—use liquid savings you can access without penalties or delays. The whole point is “survive fast.”

Ready to run your numbers? Open the Mortgage Risk Calculator. Want to go deeper? See payment shock and emergency fund sizing.