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Qualification

GDS

Gross Debt Service ratio

Definition

Gross Debt Service ratio: your monthly housing costs (mortgage principal and interest, property tax, heating, and 50% of condo fees) divided by your gross monthly income.

CMHC caps GDS at 39% on insured mortgages; uninsured and alternative lenders set their own limits.

GDS is the housing-only ratio. It answers "can you carry the home itself?" before other debts enter the picture. Its companion, TDS, adds every other monthly debt payment and is capped at 44% on insured files.

The mortgage payment in the ratio is calculated at the stress-test qualifying rate, not your contract rate, so the payment counted is larger than the one you'll actually make. Property tax is usually taken from the listing or tax bill, and heating is often a lender or insurer standard estimate.

If GDS is the binding limit, a larger down payment or (where eligible) a longer amortization helps most. If TDS is the problem instead, paying down other debts is the lever. Our affordability calculator shows which ratio is holding you back.

Worked example

Illustrative: household income $120,000 a year ($10,000/month). Property tax $450/month, heating $120/month, no condo fees. Contract rate an assumed 4.00%, so the qualifying rate is 6.00%.

39% GDS limit: $3,900/month for housing. Subtract tax and heat ($570) and the qualifying mortgage payment can be up to $3,330/month, which at 6.00% over 25 years supports a mortgage of about $520,000.

Add a $600/month car loan and TDS (44% = $4,400) becomes the tighter limit: $4,400 − $600 − $570 = $3,230, or about $505,000 of mortgage. That's the pattern where paying off other debt raises your ceiling.

Illustrative figures only, rounded; not a quote or current rate. See today’s rates on our live board.

Sources

  1. Calculating GDS / TDS (CMHC)
  2. Minimum qualifying rate for uninsured mortgages (OSFI)
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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. Roughly 680+ opens the widest range of A-lender options; CMHC-insured mortgages need at least one borrower at 600 or higher; lower scores usually route to alternative (B) lenders.

Debt service ratio

The percentage of your gross income that goes to housing (GDS) or to housing plus all other monthly debt payments (TDS). On insured mortgages, CMHC caps GDS at 39% and TDS at 44%; the ratios are calculated at the stress-test qualifying rate.

Down payment

The cash you put toward the purchase. Minimums: 5% on the first $500K and 10% on the portion from $500K to $1.5M; at $1.5M or more, 20%. Below 20% requires CMHC, Sagen, or Canada Guaranty insurance.

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 check that you could still afford your mortgage at a higher "qualifying rate": the greater of your contract rate + 2% or 5.25%. OSFI sets it for uninsured mortgages at federally regulated lenders, and the federal government applies the same test to insured mortgages. It limits how much you can borrow, not what you pay.