Debt-to-Income Ratio in Canada: GDS, TDS and the Numbers Lenders Use
By Jordan Ellis · Published · Reviewed
Quick Answer
Canadian lenders use two ratios: GDS (housing costs — mortgage, tax, heat, half of condo fees — under 39% of gross income) and TDS (housing plus all other debt payments under 44%). On $100,000 gross, that's $3,250/month for housing and $3,667 for everything. The fastest way to lower your ratios isn't earning more — it's killing a $400/month debt payment, which can restore $60,000–$80,000 of mortgage room.
Lenders don’t ask if a payment “feels affordable.” They divide two numbers and compare against two limits. Understand the division and you understand the approval.
The two ratios
GDS — Gross Debt Service (39% cap): mortgage payment (calculated at the stress-test rate, not your actual rate) + property tax + heat + 50% of condo fees, as a share of gross monthly income.
TDS — Total Debt Service (44% cap): everything in GDS, plus every other debt payment: car loans, credit card minimums (lenders use ~3% of balance), student loans, lines of credit.
Both caps generally assume a credit score of 680 or more. Below that, insured mortgages are often limited to 35/42, which cuts buying power by roughly 10–15%.
Worked example: $100,000 income, $500/month of debts
- Gross monthly: $8,333
- GDS room: $8,333 × 39% = $3,250 for housing
- TDS room: $8,333 × 44% = $3,667, minus $500 of debts = $3,167 — TDS binds first
After $350 tax + $150 heat, that leaves ~$2,667–$2,750 for the stress-tested mortgage payment — a mortgage around $400,000–$420,000 at current rates. Kill the $500 debt payment and the ceiling jumps by roughly $70,000. The full breakdown by salary lives on our affordability pages.
What doesn’t count (but still matters)
Rent, phone plans, insurance, groceries, subscriptions — invisible to GDS/TDS. That’s a gap between “approved” and “comfortable” you have to police yourself; the 50/30/20 framework is the personal-finance version of the same discipline.
Five ways to lower your ratios before applying
- Pay off small-payment debts — monthly payments, not balances, drive TDS
- Crush credit card balances — 3% of every balance counts monthly; $10,000 of card debt costs $300/month of TDS room
- No new credit for 6 months — new loans count immediately and hard pulls cost points
- Add a co-borrower — their income raises the denominator (their debts join too)
- Longer amortization or bigger down payment — lowers the payment inside GDS
Run your exact ratios — including the stress-test rate and both caps — on the mortgage stress test calculator.
The one-line answer
Under 39/44 gets you approved; under ~30/38 keeps you sleeping at night. The bank’s maximum is a ceiling, not a target.
Official sources
Rules and dollar limits change. Confirm current amounts with the official pages below before you act · Last reviewed .