GDS and TDS Ratios Explained: How Lenders Decide What You Can Afford (2026)

When a lender decides how much mortgage you qualify for, two numbers do most of the work: your Gross Debt Service (GDS) and Total Debt Service (TDS) ratios. Understanding them tells you exactly why your approval is what it is — and how to make it bigger. Estimate your affordability.

The short answer

GDS is the share of your gross monthly income that goes to housing costs; TDS is the share that goes to housing plus all your other debt payments. For an insured mortgage, lenders generally want GDS at or below 39% and TDS at or below 44%. Lower both, and you qualify for more home.

What goes into GDS

Gross Debt Service covers your core housing costs as a percentage of gross (pre-tax) income:

• Mortgage principal and interest (calculated at the stress-test rate, not your actual rate).
• Property taxes.
• Heating costs.
• 50% of condo/strata fees, if applicable.

Divide those by your gross monthly income and you have your GDS. The mortgage portion uses the stress-test rate, which is why your qualifying payment is higher than the one you'll actually make.

What goes into TDS

Total Debt Service is GDS plus every other monthly debt obligation:

• Car loans and leases.
• Credit card payments (lenders use roughly 3% of the balance per month).
• Lines of credit and student loans.
• Support payments and other recurring obligations.

This is why paying down a car loan or clearing a credit card can increase your mortgage approval more than a raise would — it directly lowers TDS.

A simple worked example

Say you earn $7,000 gross per month. At a 39% GDS limit, your maximum housing cost is about $2,730. At a 44% TDS limit, your maximum total debt load is about $3,080 — meaning you have roughly $350 of room for car payments, credit cards, and other debts before housing has to shrink. Carry a $400 car payment and your affordable mortgage payment drops accordingly. See the full math in how much mortgage you can afford.

How to improve your ratios

• Pay down or pay off consumer debt — eliminating a car or card payment lowers TDS immediately.
• Increase your down payment — a bigger down payment means a smaller mortgage and a lower GDS.
• Extend the amortization — a longer amortization lowers the monthly payment and your ratios (at the cost of more interest over time).
• Add qualified income — a co-applicant's income or documented bonus/overtime can lift the income side of the ratio (buying with a co-signer).
• Avoid new debt before applying — a new lease or loan right before your application can push TDS over the line.

Why ratios matter even with great credit

You can have a perfect credit score and still be declined if your ratios are too high — affordability rules are separate from credit. That's also why two people with the same income get different approvals: the one carrying less debt has more TDS room. Ratios, credit, and the stress test all have to line up, which is the whole picture in how a mortgage works in Canada.

Frequently asked questions

What is a good GDS and TDS ratio in Canada?

For insured mortgages, lenders generally cap GDS at 39% and TDS at 44%. The lower your ratios, the stronger your application — and some lenders allow slightly higher limits for strong credit and large down payments.

What's the difference between GDS and TDS?

GDS counts only housing costs (mortgage, taxes, heat, half of condo fees) against your income. TDS adds all your other debt payments on top. TDS is always the higher of the two.

Does the stress test affect my GDS and TDS?

Yes. The mortgage payment inside both ratios is calculated at the stress-test qualifying rate, not your contract rate, so your ratios reflect a higher payment than you'll actually pay. This is by design — it confirms you could handle higher rates.

Can I get approved if my TDS is over 44%?

Sometimes — certain lenders and uninsured (20%+ down) mortgages allow higher limits with strong credit and reserves. Alternative lenders are also more flexible on ratios. A broker can find the lender whose rules fit your numbers.

Want to know your real qualifying number? We'll calculate your GDS and TDS, show you what's holding them back, and find the lender with the most room. Start with a pre-approval or try the affordability calculator.