Debt-to-income (GDS + TDS) ratio

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)

Related

• Full affordability calculator
• Pre-approval amount
• Stress test
• Co-signer impact