GDS and TDS Ratios in Canada, Explained

What GDS measures

Gross Debt Service divides qualifying monthly housing costs by gross monthly household income. Housing costs generally include the qualifying mortgage payment, property taxes, heating and 50% of condominium fees.

• 1GDS = monthly housing costs ÷ gross monthly income
• 1A $3,900 housing cost on $10,000 gross monthly income equals 39%
• 1Lower property costs can leave more room for the mortgage payment

What TDS adds

Total Debt Service uses the same housing costs and adds recurring debt obligations such as car loans, student loans and required credit-card payments. That is why two households with the same income and down payment can receive very different estimates.

• 2TDS = (monthly housing costs + other monthly debts) ÷ gross monthly income
• 2A $500 car payment directly reduces room under the TDS limit
• 2Paying off debt may matter more than adding the same amount to a down payment

Why your lender's result may differ

The ratio is only one part of underwriting. Credit history, income stability, property type, loan insurance, documentation and lender-specific policies can change the result. Use the ratios to understand sensitivity, then obtain a formal assessment before making a firm commitment.

Worked example: calculate both ratios

Assume gross monthly household income of $10,000, qualifying housing costs of $3,500 and other required debt payments of $600. GDS is $3,500 ÷ $10,000 = 35%. TDS is ($3,500 + $600) ÷ $10,000 = 41%.

This example sits below the commonly published 39% GDS and 44% TDS reference maximums, but that does not guarantee approval. The lender still reviews the income source, credit, property, documentation and its own underwriting rules.

What to include in monthly debt

Use qualifying debt obligations, not optional extra repayments. For instalment loans, start with the scheduled monthly payment. Revolving credit can be assessed differently: CMHC publishes a minimum monthly allowance of 3% of the outstanding balance for credit cards and unsecured lines of credit. A lower payment shown on a statement is not necessarily the amount used for mortgage qualification.

Assume a $10,000 credit-card balance, no other debts and a lender applying the 3% allowance. Enter $300 per month in ToolsFA—not the $10,000 balance or a hypothetical $100 statement minimum. With $3,500 of qualifying housing costs and $10,000 gross monthly income, this gives 38% TDS rather than 36%. The tool does not convert balances automatically.

• 5Confirm the lender's monthly qualifying amount for each debt, then total those amounts.
• 5Run a second scenario only if a debt will be fully repaid before qualification.
• 5Ask the lender how secured lines of credit, support payments or rental-property obligations will be treated.

When debt repayment stops increasing mortgage room

Assume $10,000 gross monthly income, $1,200 of other monthly debt obligations, $500 monthly property tax, $150 heating and $200 condo fees. GDS allows $3,900 of housing costs. TDS allows $4,400 less $1,200, or $3,200. Housing costs must fit the lower ceiling. Subtract tax, heat and half the condo fee ($750 total), leaving $2,450 for the qualifying mortgage payment.

If debts fall to $500 per month, TDS permits $3,900 of housing costs, matching GDS, so mortgage-payment room rises to $3,150. Even clearing the remaining $500 would leave that $3,150 unchanged because GDS now binds. These are monthly payment limits, not approved loan amounts. Any cash used to repay debt is no longer available for the down payment or closing costs.

Test debt payments and down payment together in the affordability calculator →

Follow the full income-to-purchase-price worked example →

Frequently asked questions