Qualification

Debt service ratio

The percentage of your gross income that goes to housing (GDS) or all monthly debt obligations (TDS). OSFI's stress test caps GDS at 39% and TDS at 44% on insured files.

Debt-service ratios are the core affordability test. GDS counts just housing (mortgage, property tax, heat, half of condo fees); TDS adds every other monthly debt. Lenders need both under their caps — roughly 39% GDS and 44% TDS on insured files, with alt and credit-union lenders allowing more.

They're calculated against the higher stress-test qualifying rate, not your actual rate, so the payment you're tested on is bigger than the one you'll pay. That's why your approved amount comes in below what your real payment could cover.

The fastest way to improve your ratios is to clear or lower other monthly obligations before applying — paying off a car loan can free up more borrowing room than saving a few thousand more for the down payment.

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Co-signer

A creditworthy individual (often a parent) who agrees to be equally liable for the mortgage so the primary applicant qualifies. The co-signer's income is added to the application; their credit is fully exposed.

Credit score

A 300–900 score from Equifax or TransUnion summarizing your credit history. 680+ unlocks most A-lender rates. 600-680 typically routes to alt or B lenders.

Down payment

The cash you put toward the purchase. Minimums: 5% on the first $500K, 10% on $500K–$1M, 20% above $1M. Below 20% requires CMHC, Sagen, or Canada Guaranty insurance.

GDS

Gross Debt Service ratio

Your housing costs (mortgage payment + property tax + heating + 50% of condo fees) as a percentage of gross income. Most lenders cap GDS at 39% on insured files, 44%+ at alt lenders.

Qualifying rate

The stress-test rate you must qualify at: the greater of your contract rate plus 2% or 5.25%. Doesn't change what you actually pay — only whether you qualify.

Stress test

The mandatory check that you'd still qualify if rates rose to a higher "qualifying rate." Set by OSFI as greater of your contract rate + 2% or 5.25%. Limits how much you can borrow.

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