GDS and TDS — What They Are and Why They Matter
GDS (Gross Debt Service): your monthly housing costs (mortgage P+I + property tax + heat + 50% of condo fees) divided by gross monthly income. Maximum: 39% at most A-lenders. TDS (Total Debt Service): GDS components plus all other monthly debt payments (car loans, student loans, credit card minimums at 3% of balance). Maximum: 44%.
Both must pass for your application to be approved. The lower of the two maximums is your actual qualifying limit. Most borrowers with significant consumer debt hit TDS before GDS.
The Credit Card Rule Most Borrowers Don’t Know
Lenders calculate credit card minimum payments at 3% of your current balance — regardless of what you actually pay each month. A $20,000 credit card balance = $600/month in TDS, even if you pay it in full every month. Eliminating that balance before applying increases your qualifying mortgage by approximately $95,000.
This is the fastest and most cost-effective way to improve your TDS ratio before a mortgage application. Pay down revolving balances first — always.
GDS & TDS Ratios — Common Questions
Debt Service Ratio FAQ — GDS, TDS & Ontario Qualification
The two ratios every Canadian lender runs before approving a mortgage. What counts, what the limits are, and what to do when you’re over.
Under 32% is excellent and qualifies at every lender. 32%–39% is the standard approval range. Above 39%: most A-lenders decline; B-lenders and credit unions have higher thresholds. Aim for under 36% for the most lender options.
All monthly debt obligations: car loans, car leases, student loans, minimum credit card payments (3% of balance), line of credit payments, support payments, and any other mortgage payments. Business debts on personal guarantee also count.
Yes — B-lenders and provincial credit unions have more flexible ratio policies, accepting TDS up to 50% with compensating factors (strong equity position, stable employment, good credit history). Rate premiums of 50–150 basis points above A-lender rates apply.
Fifty percent of monthly condo fees count toward your GDS calculation. A $600/month condo fee adds $300/month to your GDS. On a $100,000 income, that $300/month difference equates to approximately $47,000 in reduced maximum mortgage. High condo fees in Toronto significantly affect affordability relative to freehold properties at similar prices.
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