GDS and TDS Ratios in Canada: How Brokers Calculate Them (With the Stress Test)

GDS: Gross Debt Service ratio

GDS measures housing costs against gross income. The numerator is the classic “PITH” basket:

• P + I — the mortgage principal and interest payment, calculated at the qualifying rate, not the contract rate
• T — property taxes
• H — heating costs
• Plus 50% of condo fees, where applicable

Divide that monthly total by gross monthly income. The commonly applied insured guideline caps GDS at 39%.

TDS: Total Debt Service ratio

TDS takes the entire GDS numerator and adds every other monthly obligation: car loans and leases, credit card and line-of-credit payments (typically 3% of the outstanding balance if revolving), student loans, support payments, and co-signed debts. The commonly applied insured guideline caps TDS at 44%.

A client can pass GDS comfortably and still die on TDS — a $700 truck payment moves TDS by roughly 5–8 points on a typical income, which is often the difference between an approval and a decline.

The stress test changes the payment you qualify with

Both ratios use the mortgage payment at the minimum qualifying rate: the higher of the contract rate plus 2 percentage points, and the regulatory floor (5.25% when the current framework was introduced — always verify the current floor against OSFI guidance before quoting, as it is reviewed periodically). A client offered 4.5% is therefore qualified as if they were paying 6.5%.

A worked example

Household income of $140,000 ($11,667/month), buying at $550,000 with 20% down ($440,000 mortgage), contract rate 4.5%, 25-year amortization, $350/month property tax, $150/month heat, no condo fees, and a $550/month car loan.

• Qualifying rate: max(4.5% + 2%, 5.25%) = 6.5%
• P+I at 6.5% (semi-annual compounding): ≈ $2,947/month (vs. ≈$2,435 at the contract rate — the payment they'll actually make)
• GDS = (2,947 + 350 + 150) / 11,667 ≈ 29.5% ✓ under 39
• TDS = (2,947 + 350 + 150 + 550) / 11,667 ≈ 34.3% ✓ under 44

This file qualifies with room to spare — but notice the stress test added roughly $500/month to the qualifying payment. That's the gap that surprises clients who pre-shopped with a generic affordability calculator.

Practical notes brokers learn the hard way

• Heat is not optional. Lenders impute a heating cost even when the client doesn't provide one; conventions vary by lender and property size.
• Rental offsets vary wildly. How much rental income counts (and whether it offsets or adds) is lender policy, not regulation — confirm before promising numbers.
• Guidelines are ceilings, not entitlements. Insurers and lenders can hold tighter internal limits, especially for weaker credit.
• Conventional files have more latitude. The 39/44 guidelines bind insured mortgages; uninsured lending can differ by lender.

Run the numbers yourself

Try our free Canadian mortgage payment calculator for the payment side, and the prepayment penalty calculator when a refinance is on the table. Inside BrokerOS, GDS/TDS runs automatically against live client files — stress test included — so qualification stops being a spreadsheet exercise.