GDS and TDS ratios —
the two numbers that
decide your mortgage.
Lenders keep GDS under ~39% and TDS under ~44% — both calculated at the stress-test rate. Here's exactly how they're built, with worked examples, and how to improve them.
Four things this guide
will make clear.
GDS and TDS are calculated the same way by every federally regulated lender — know the formula, know your ceiling.
GDS: your housing costs vs income
Gross Debt Service captures PITH — Principal, Interest (at the stress-test rate), property Tax, and Heat — plus half of condo fees, divided by gross monthly income. The insured ceiling is ~39%.
TDS: every debt vs income
Total Debt Service starts with everything in GDS and adds all other monthly obligations: car loans, credit-card minimums, lines of credit, student loans, and support payments. The insured ceiling is ~44%.
Both ratios use the stress-test rate
The mortgage-payment portion of GDS and TDS is calculated at the stress-test rate — the greater of your contract rate + 2% or 5.25%. Your real payment uses your actual rate; the qualifying ratio uses the higher one.
Five ways to improve your ratios
Pay down debt, add a co-applicant, increase your down payment, extend the amortization to 30 years, or target a lower-cost property. Clearing one car loan often frees more room than the same cash added to the down payment.
How GDS and TDS
are calculated.
Three steps. The same formula used by every federally regulated lender in Canada.
Establish your gross monthly income
The denominator for both ratios is your verified gross (pre-tax) income. Salaried employees use base pay; self-employed borrowers use a 2-year average from T1 Generals and NOAs. Two applicants' incomes combine — which is why adding a co-applicant is so powerful.
Calculate GDS: housing costs ÷ income
Add your monthly mortgage payment (at the stress-test rate), property tax, heat, and half of any condo fees. Divide by gross monthly income. Keep this under ~39% for insured mortgages. This is your GDS ratio.
Calculate TDS: all debt ÷ income
Take your GDS housing costs and add every other monthly debt payment — car loans, credit-card minimums, lines of credit, student loans, support payments. Divide by gross monthly income. Keep this under ~44%. This is your TDS ratio.
Is this guide
for you?
Tap any situation below to see how we approach it.
If you’re…You're applying for a mortgage and want to know if you'll qualify
You're applying for a mortgage and want to know if you'll qualify
We model your real GDS and TDS across multiple lenders before you make an offer — and tell you exactly how much room you have before you hit the ceiling.
Model my ratiosIf you’re…Your TDS is too high because of credit card or car loan debt
Your TDS is too high because of credit card or car loan debt
Clearing a single $450/month car loan can free ~$70,000 more mortgage at typical qualifying rates. We'll show you the exact leverage before you make a move.
See my optionsIf you’re…You want to understand why the stress test limits your mortgage
You want to understand why the stress test limits your mortgage
The stress test raises the mortgage-payment input to your GDS ratio. A higher ratio means a smaller mortgage. We walk through your exact numbers so you know the binding constraint before you write an offer.
Read the stress test guideIf you’re…You're self-employed and unsure how your income is calculated
You're self-employed and unsure how your income is calculated
Self-employed income is typically the 2-year average from your T1 Generals and NOAs. Some lenders use add-backs; others use gross revenue. We match your income story to the lender whose policy fits.
See self-employed optionsIf you’re…Your ratios are borderline and you want to know your options
Your ratios are borderline and you want to know your options
A 30-year insured amortization (available to all first-time buyers and new-build purchasers), a co-signer, or a credit union may provide the qualifying room a federally regulated lender won't.
Explore my optionsIf you’re…You want to add a co-applicant to strengthen your application
You want to add a co-applicant to strengthen your application
Adding a co-applicant's income directly increases the denominator of both ratios — often the fastest path to qualifying without changing the property price. We model the before-and-after before you commit.
Start my applicationA worked example —
ratios that pass.
A couple with $9,000 gross monthly income. Both ratios under the ceiling — and the remarkable leverage of paying off one debt.
| Ratio | Costs included | Monthly total | ÷ $9,000 income | Limit | Pass? |
|---|---|---|---|---|---|
| GDS | Mortgage + tax + heat | $3,150 | 35.0% | ~39% | Yes ✓ |
| TDS | GDS + $450 car loan | $3,600 | 40.0% | ~44% | Yes ✓ |
Illustrative only — your income, debts, and qualifying rate will differ. Try the stress test calculator.
Common questions,
clear answers.
GDS, TDS, the stress test, and how to improve your ratios — answered plainly.
What is the GDS ratio?
GDS (Gross Debt Service) is the share of your gross monthly income that goes to housing costs: your mortgage payment (calculated at the stress-test rate), property tax, heating, plus half of any condo fees. Most lenders want GDS at or below about 39% for insured mortgages.
What is the TDS ratio?
TDS (Total Debt Service) is your GDS plus all of your other monthly debt obligations — car loans, credit-card minimums, lines of credit, student loans and support payments — divided by gross income. Lenders generally cap TDS at about 44%.
What are the maximum GDS and TDS ratios in Canada?
For insured (less than 20% down) mortgages the common ceilings are 39% GDS and 44% TDS. Some lenders and stronger credit profiles stretch slightly higher; alternative (B) lenders allow higher ratios at a higher rate. Provincial credit unions and private lenders use their own limits.
Are GDS and TDS calculated at my actual rate or the stress-test rate?
At the stress-test rate — the greater of your contract rate + 2% or 5.25%. That higher rate makes the mortgage-payment portion of the ratio larger, which is exactly why the stress test reduces how much you can borrow. Your real payment is still based on your actual rate.
What counts as income for GDS and TDS?
Gross (pre-tax) income that a lender can verify and consider stable: salary, hourly wages with a track record, self-employment income (usually a 2-year average), reliable bonus or commission, and often a portion of rental income. Two applicants' incomes combine, which is why adding a co-applicant improves both ratios.
How can I lower my GDS and TDS ratios?
Pay down or pay off other debt (this directly lowers TDS), add a co-applicant's income, increase your down payment to shrink the mortgage, extend the amortization to lower the payment, or choose a lower-cost property. Clearing a single car loan often unlocks more borrowing power than an equivalent amount added to the down payment.
What if my ratios are slightly over the limit?
You still have options: a slightly larger down payment, a co-signer, a longer amortization (30-year insured amortization is available to all first-time buyers and buyers of new builds), a provincially regulated credit union with its own qualifying policy for uninsured loans, or a B-lender that permits higher ratios. A broker matches your file to the lender whose limits fit.
We’ll try to beat your rate.
If we can’t, we pay you $500.¹
¹ Rate Beat: eligible Big-6 bank written offers only · same product, term & amount · $500 paid to you or your nominated charity at closing · conditions apply
Find a specialist in your city
GDS and TDS ratios work the same way everywhere in Canada — what changes is your local market, the lenders who serve it, and the advisors who know which qualifying policies give your file the most room.