Debt Service Ratio Calculator

Two of the most important numbers in Canadian mortgage qualification are your Gross Debt Service (GDS) and Total Debt Service (TDS) ratios. These ratios determine whether you qualify for a mortgage, how much you can borrow, and what interest rate you'll be offered. Understanding them before you apply can save you time, money, and disappointment.

What Is GDS (Gross Debt Service)?

Your GDS ratio measures the percentage of your gross monthly income that goes toward housing costs. Housing costs include your mortgage payment (principal + interest), property taxes, heating costs, and 50% of condo fees if applicable. For CMHC-insured mortgages (less than 20% down payment), the GDS limit is 32%. For conventional mortgages (20%+ down), most lenders allow up to 35%.

Formula: GDS = (Mortgage Payment + Property Tax + Heating + 50% Condo Fees) ÷ Gross Monthly Income × 100

What Is TDS (Total Debt Service)?

Your TDS ratio includes everything in your GDS calculation plus all other monthly debt obligations: car payments, credit card minimums, student loans, lines of credit, child support, and any other mortgages. The CMHC limit is 40% for insured mortgages and 42% for conventional. Some lenders stretch to 44% for strong applicants. TDS is the stricter measure because it accounts for your entire debt picture.

Formula: TDS = (Housing Costs + All Other Debts) ÷ Gross Monthly Income × 100

CMHC Qualification Ratios

The Canada Mortgage and Housing Corporation sets the standard qualification ratios used by most lenders. For CMHC-insured mortgages, you must have a GDS of 32% or less and a TDS of 40% or less. These ratios are calculated using the mortgage qualifying rate (the higher of your contract rate + 2% or the Bank of Canada benchmark rate), not your actual contracted rate. This stress test ensures you can afford payments even if rates rise.

How to Improve Your Ratios

• Pay down existing debts — Even eliminating a $300/month car payment can dramatically improve your TDS ratio and unlock a higher mortgage amount.
• Increase your income — A co-applicant, raise, or side income can make a significant difference. Lenders use gross income, so include all sources.
• Choose a longer amortization — Spreading payments over 30 years instead of 25 lowers your monthly payment, improving both GDS and TDS.
• Reduce the purchase price — A lower mortgage payment directly improves your ratios. Sometimes a $50,000 price reduction is the difference between qualifying and not.
• Consolidate debts — Rolling high-interest debts into a lower-rate consolidation loan can reduce your monthly obligations.
• Consider a larger down payment — More money down means a smaller mortgage and lower payments.

What Lenders Actually Look For

While GDS and TDS are the standard benchmarks, lenders consider additional factors: your credit score (ideally 680+ for best rates), employment stability (2+ years in the same field), the property type and location, your down payment source (savings vs. gifted), and your overall financial picture. A strong application with slightly elevated ratios may still be approved, while a borderline ratio with weak credit history will likely be declined. This is where a mortgage broker adds value — they know which lenders are flexible on which criteria.