Updated: August 26, 2026
GDS and TDS are two calculations lenders use to compare your income with the costs of the home and your other debts.
Here is the simple version. GDS looks at housing costs. TDS starts with the same housing costs, then adds obligations such as a car loan, credit card debt, line of credit or student loan.
For CMHC-insured mortgages, CMHC currently restricts GDS to 39% and TDS to 44%. Those numbers are not universal promises of approval. The lender, mortgage insurer, property, income, credit and type of application can all affect the decision.
GDS and TDS at a glance
| Ratio | What it measures | Costs normally included |
|---|---|---|
| GDS, or Gross Debt Service | The share of gross income needed for the home | Qualifying mortgage principal and interest, property taxes, heating and 50% of condo fees when applicable |
| TDS, or Total Debt Service | The share of gross income needed for the home and other debts | Everything in GDS, plus the debt obligations the lender must count |
Gross income means income before income tax and other payroll deductions. If more than one borrower applies, the lender may use qualifying household income, subject to its documentation rules.
How GDS is calculated
GDS answers a focused question: how much of your gross income would go toward carrying this property?
The basic formula is:
Monthly qualifying housing costs ÷ gross monthly income × 100
Housing costs normally include:
- the qualifying mortgage principal and interest payment
- property taxes
- a reasonable heating cost
- 50% of condominium fees, if applicable
The mortgage payment used for qualification may be higher than the payment at your contract rate because the mortgage stress test may apply. For uninsured mortgages, OSFI's current minimum qualifying rate is the higher of 5.25% or the contract rate plus 2%, subject to the applicable transaction rules. CMHC publishes the same qualifying-rate formula for insured mortgages.
How TDS is calculated
TDS answers the broader question: after including this home, how much of your gross income would be committed to all debts the lender counts?
The basic formula is:
(Monthly qualifying housing costs + other monthly debt obligations) ÷ gross monthly income × 100
Other obligations may include:
- credit card balances
- vehicle loans or leases
- lines of credit
- personal or student loans
- child or spousal support
- other debts that must be included under the lender's rules
The exact monthly amount used for a debt is not always the number you happen to pay that month. Lenders and insurers may have specific calculation methods for revolving credit, secured lines and other obligations. That is why two files with the same income and mortgage amount can produce different results.
A realistic example
Suppose a household has $120,000 of qualifying gross annual income, or $10,000 per month.
For the property they are considering, assume the lender uses these monthly housing costs:
| Housing cost | Monthly amount |
|---|---|
| Qualifying mortgage principal and interest | $2,500 |
| Property taxes | $500 |
| Heating | $150 |
| 50% of a $500 condo fee | $250 |
| Total housing costs | $3,400 |
The GDS calculation is:
$3,400 ÷ $10,000 = 34% GDS
Now add the other monthly debt obligations used by the lender:
| Other debt | Monthly amount used in the example |
|---|---|
| Vehicle loan | $650 |
| Line of credit | $150 |
| Student loan | $250 |
| Total other debt | $1,050 |
The TDS calculation is:
($3,400 + $1,050) ÷ $10,000 = 44.5% TDS
The housing-only ratio is 34%, but the total-debt ratio is 44.5%. In a CMHC-insured application, that TDS result would be above CMHC's current 44% limit.
This is where I see people get confused. The home may appear affordable when they look only at the mortgage payment. A vehicle loan, line of credit or other obligation can still reduce the mortgage amount available.
The example is illustrative. It does not quote an approval, product or interest rate, and a real lender may calculate individual debts differently.
The stress test and debt ratios are different
The stress test is not a third debt ratio. It changes the mortgage payment used inside the GDS and TDS calculations.
If the qualifying rate is higher than the contract rate, the payment used to test the application is higher too. That can raise both GDS and TDS even though the payment you expect to make at closing is lower.
This is one reason an online payment estimate may not match a lender's qualification result. For more context, read mortgage pre-approval versus final approval in Canada.
Qualifying is not the same as being comfortable
GDS and TDS use gross income. Your household budget runs on the money left after taxes and deductions.
The ratios also do not fully represent groceries, childcare, home insurance, repairs, transportation, subscriptions, savings goals or normal spending. A mortgage may fit a lender's ratio limits and still feel too tight for your household.
I would use qualification as one boundary and your real monthly budget as another. The lower of those two numbers is usually the safer starting point for a home search.
What can help if the ratios are too high?
The right response depends on what is driving the calculation. Possible options include:
- considering a lower purchase price
- increasing the down payment without using money needed for closing or emergencies
- paying down a debt that is materially affecting TDS
- waiting until a loan or lease payment ends
- documenting all income a lender is allowed to use
- comparing properties with different taxes, heating costs or condo fees
- reviewing an eligible amortization option while understanding that a longer amortization generally increases total interest
Do not move down-payment money to pay a debt until the full effect has been calculated. A lower debt payment may improve TDS, but a smaller down payment may create a larger mortgage and a higher qualifying payment.
If you are still planning the cash side of the purchase, see how much down payment you need in Ontario.
What I would pay attention to
First, I would ask which ratio is limiting the application. If GDS is the problem, the property costs or mortgage amount may be the main issue. If GDS is within range but TDS is high, another debt may be doing more damage than expected.
Second, I would ask what monthly payment the lender is assigning to each debt. The balance on a credit report does not always tell you the amount used for qualification.
Finally, I would look beyond the maximum. Keeping some room for property-cost increases and everyday life can matter more than reaching the largest mortgage amount available.
Bottom line
GDS compares gross income with housing costs. TDS adds your other debt obligations. Both can affect how much mortgage you may qualify for, and the stress test can increase the mortgage payment used in both calculations.
CMHC's 39% GDS and 44% TDS limits are useful reference points for insured mortgages, not a guarantee that every application within those numbers will be approved. Get the income, property costs, debts and down payment reviewed together before relying on a purchase budget.
Not sure which part of the calculation is limiting your budget? Send me a message or book a call and we can go through the numbers together.
This article provides general information, not personalized financial advice. Mortgage qualification, debt treatment, insurance eligibility, rates and product availability depend on the borrower, property, lender and insurer requirements.