GDS and TDS in Canada: how lenders calculate what you can borrow
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By Editorial team
On $110,000 household income ($9,167/month gross), a mortgage payment of $2,800/month plus $350/month property tax and $150/month heat puts your Gross Debt Service (GDS) ratio at 36.0%, under the 39% lender cap. Add a $450 car loan and $300 student loan ($750/month total other debt) and Total Debt Service (TDS) climbs to 44.2%, just over the 44% ceiling. That split is how Canadian lenders decide what you can borrow. This guide is for buyers who want to see the math before a pre-approval conversation.
The scenario modeled
The worked example below matches the GDS/TDS panel in the calculator preset linked mid-article. It uses a $596,000 purchase, 20% down, 5.10% fixed over 25 years, and contract-rate principal and interest sized to $2,800/month on the engine schedule.
| Input | Value |
|---|---|
| Household gross income | $110,000/year ($9,167/month) |
| Purchase price | $596,000 |
| Down payment | $119,200 (20%) |
| Mortgage balance | $476,800 |
| Contract rate | 5.10% (5-year fixed) |
| Amortization | 25 years (300 months) |
| Property taxes | $4,200/year ($350/month) |
| Heating (monthly) | $150/month |
| Condo fees | $0 |
| Other monthly debts | $750 ($450 car + $300 student loan) |
| Lender GDS limit (typical) | 39% |
| Lender TDS limit (typical) | 44% |
How GDS and TDS are calculated
GDS (Gross Debt Service): (monthly mortgage payment + property tax + heat + 50% of condo fees) ÷ gross monthly income × 100.
TDS (Total Debt Service): (same housing costs + all other monthly debt payments) ÷ gross monthly income × 100.
In this scenario the GDS numerator is $2,800 + $350 + $150 = $3,300/month. Dividing by $9,167/month income gives 36.0% GDS. TDS adds $750 in other debts for a $4,050/month numerator and 44.2% TDS.
Federally regulated lenders commonly use a 39% GDS and 44% TDS ceiling. Some lenders apply 32% GDS and 42% TDS on uninsured mortgages (20% down or more). Credit unions and alternative lenders may use different thresholds; confirm with your broker.
The findings
GDS clears with 3.0 percentage points of room under a 39% cap. TDS is 0.2 points above a 44% cap, so other debt is the binding constraint even though housing costs alone look comfortable.
| Metric | Worked example ($110k income) |
|---|---|
| Monthly P&I (contract rate) | $2,800 |
| Monthly property tax | $350 |
| Monthly heating | $150 |
| GDS housing costs (numerator) | $3,300 |
| GDS ratio vs 39% cap | 36.0% (within limit) |
| Other monthly debts | $750 |
| TDS ratio vs 44% cap | 44.2% (0.2% over) |
| Modeled total interest (25 yr) | $363,289 |
| Schedule length | 300 months (25 years) |
How to get back under the TDS cap: paying off the $750/month in other debt would drop TDS to 36.0% (same as GDS). Raising household income to about $115,800/year while keeping the same debts would also bring TDS to roughly 44.0%. A smaller mortgage (lower P&I) works too.
Stress test vs contract rate: lenders use the mortgage payment at your qualifying rate in the GDS/TDS formulas, not the contract rate shown above. At 5.10% contract, qualifying is usually 7.10% (contract + 2.00%). The same loan balance at 7.10% produces a higher tested payment, which tightens both ratios. See our stress test guide for a side-by-side on maximum borrowing. This preset uses contract-rate P&I so you can see the ratio math clearly; re-run with your qualifying rate in the calculator before you rely on approval numbers.
Values you may want to plug in yourself: qualifying-rate P&I for this loan size at 7.10%, lender-specific 32%/42% uninsured caps, and any debts beyond the $450 + $300 split (lines of credit, child support, etc.). The calculator GDS/TDS panel accepts one combined "other debts" field.
Canadian context
OSFI Guideline B-20 requires federally regulated lenders to assess borrowers at the higher of the contract rate plus 2.00% or the minimum qualifying rate (5.25% as of early 2026). That tested payment feeds directly into GDS and TDS. CMHC and other insurers align with the same ratio framework on insured files.
Source: Office of the Superintendent of Financial Institutions, "Residential Mortgage Underwriting Practices and Procedures (Guideline B-20)," revised January 2023, accessed June 2026. URL: https://www.osfi-bsif.gc.ca/en/guidance/guidance-library/residential-mortgage-underwriting-practices-procedures
When this applies - and when it doesn't
This scenario applies when you are applying through a federally regulated lender, documenting gross income on a standard application, and carrying moderate non-mortgage debt alongside a conventional 20% down purchase.
It doesn't apply when: you borrow from a credit union that does not follow OSFI B-20 (ratio caps may differ), you are renewing in place with the same lender (no new stress test on a straight renewal), or your file is driven by alternative documentation programs with custom ratio rules. Rental income, self-employment, and bonus income are also adjusted by lenders in ways this single-income example does not model.
If you are putting less than 20% down, mortgage default insurance premiums and stricter insurer rules can change the effective loan amount and ratio treatment. See our CMHC insurance guide for how premiums roll into the balance.
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Frequently asked questions
- What is the GDS ratio for a mortgage in Canada?
- Gross Debt Service (GDS) is your monthly housing costs divided by gross monthly household income, expressed as a percentage. Housing costs include your mortgage payment, property taxes, heating, and 50% of condo fees. Federally regulated lenders generally cap GDS at 39%. Some lenders use a tighter 32% ceiling on uninsured mortgages.
- What is the difference between GDS and TDS?
- GDS counts only housing costs against income. Total Debt Service (TDS) adds every other monthly debt obligation you must pay, such as car loans, student loans, and credit card minimums, to that same housing-cost total. The usual TDS ceiling is 44%, with some lenders using 42% on uninsured files.
- Does the stress test rate affect my GDS and TDS ratios?
- Yes. Lenders plug your mortgage payment at the qualifying rate into the GDS and TDS formulas, not your contract rate. On a 5.10% offer, that often means testing at contract rate plus 2.00%. Your actual payment stays at the contract rate once you are approved.
- How can I lower my TDS ratio if I am over the 44% limit?
- You can pay down or eliminate monthly debts, add a co-borrower to raise gross income, choose a less expensive home, or put more down to shrink the mortgage payment. Even a $450/month car loan on $9,167/month income adds about 4.9 points to TDS.
- Are GDS and TDS calculated on gross or net income?
- Lenders use gross income before tax. That includes salary, guaranteed bonuses, and other documented sources they will accept on your application. Net pay after deductions is not what goes into the ratio.