What debt ratios do Canadian lenders use?

Two. GDS covers housing costs — mortgage payment, property tax, heating and half of condo fees — as a percentage of gross income. TDS adds every other monthly debt payment. Your approval is limited by whichever binds first.

What GDS and TDS limits should I aim for?

Insured mortgages are commonly held to about 39% GDS and 44% TDS. Uninsured lending has more room, and credit unions and alternative lenders more still. Strong credit and a large down payment can stretch the limits; weak credit tightens them.

Which debts count against me?

The monthly obligation, not the balance. Credit cards are usually counted at about 3% of the balance, lines of credit at an interest-only or amortised figure, and car loans and leases at the actual payment — leases included even when they are nearly finished.

How can I improve my ratios quickly?

Clear the debt with the worst payment-to-balance ratio, not the biggest balance. Paying off a small loan with a high monthly payment frees more TDS room than putting the same money against the mortgage, and often moves an approval.

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GDS + TDS

Debt-to-income (GDS + TDS) ratio

GDS = shelter ÷ gross monthly income. TDS adds all other debt. Insured Canadian mortgages cap at 39 / 44; uninsured at 44 / 50.

Your scenario

Gross annual income$120,000

$20,000$1,000,000

Total monthly shelter (P+I+T+H + 50% condo fees)$2,800

$0$20,000

Other monthly debt$650

$0$10,000

Result

GDS ratio

28.00%

TDS ratio

34.50%

GDS cap (insured)

39%

TDS cap (insured)

44%

GDS and TDS — the two ratios every Canadian lender uses

Gross Debt Service (GDS) measures housing costs against your income. Total Debt Service (TDS) adds in all your other monthly debt. Canadian lenders cap both — if either ratio exceeds the cap, your mortgage application is declined.

The standard caps

Insured mortgages (under 20% down): 39% GDS / 44% TDS
Uninsured mortgages (20%+ down): 39% GDS / 44% TDS for most A-tier lenders; some go to 44% / 50% on uninsured
Alt-A and private: typically 44-50% TDS with documented compensating factors

What counts as shelter (GDS numerator)

Mortgage principal + interest (at qualifying rate, not contract rate)
Property tax (use the larger of estimated or annual ÷ 12)
Heat (default $150/mo if unknown)
50% of condo / strata fees (if applicable)

What counts as "other debt" (TDS adds)

Car loan payments + lease payments
Credit card minimums (3% of balance for cards with revolving balances)
Unsecured line of credit minimums (3% of balance)
Student loan payments
Child support / alimony obligations
Other mortgage payments (investment properties)

What does NOT count

Utilities (hydro, gas, internet, phone)
Groceries / discretionary spending
Insurance premiums (life, health)
Childcare / education costs

The qualifying rate trap

Your GDS/TDS calculation uses the QUALIFYING rate (higher of contract + 2% or 5.25%) — NOT your contract rate. This means GDS can look fine at your actual payment but fail under the federal stress test.

How to lower your ratios

Pay down credit cards before applying (drops TDS immediately)
Pay off your car loan if close to retiring it
Extend amortization (lowers monthly payment, lowers GDS)
Larger down payment (smaller mortgage, smaller monthly P&I)
Add a co-signer with strong income (see co-signer impact calculator)

Questions about this calculator

What debt ratios do Canadian lenders use?: Two. GDS covers housing costs — mortgage payment, property tax, heating and half of condo fees — as a percentage of gross income. TDS adds every other monthly debt payment. Your approval is limited by whichever binds first.
What GDS and TDS limits should I aim for?: Insured mortgages are commonly held to about 39% GDS and 44% TDS. Uninsured lending has more room, and credit unions and alternative lenders more still. Strong credit and a large down payment can stretch the limits; weak credit tightens them.
Which debts count against me?: The monthly obligation, not the balance. Credit cards are usually counted at about 3% of the balance, lines of credit at an interest-only or amortised figure, and car loans and leases at the actual payment — leases included even when they are nearly finished.
How can I improve my ratios quickly?: Clear the debt with the worst payment-to-balance ratio, not the biggest balance. Paying off a small loan with a high monthly payment frees more TDS room than putting the same money against the mortgage, and often moves an approval.