Mortgage Guide
Your debt service ratios decide the size of your mortgage more than any other number. Here is what goes into each one, where the limits come from, and a full worked example for a strata purchase.
When a lender tells you how much you can borrow, the answer comes from two percentages: your gross debt service (GDS) ratio and your total debt service (TDS) ratio. Get to know GDS and TDS ratios and most pre-approval numbers stop being a mystery. This guide uses the definitions published by CMHC and the Financial Consumer Agency of Canada (FCAC), then works an example through line by line.
Both ratios compare monthly costs with your gross household income, meaning income before tax and deductions.
FCAC's preparing for a mortgage page gives examples of those other debts: credit cards, car loans, lines of credit, student loans, and child or spousal support.
For insured mortgages, CMHC sets the ceilings:
| Ratio | Includes | CMHC maximum |
|---|---|---|
| GDS | Principal, interest, property taxes, heating, 50% of condo fees, site lease (leasehold) | 39% of gross household income |
| TDS | All of GDS plus every other debt payment | 44% of gross household income |
FCAC repeats the same figures as a guide for all borrowers: housing costs "shouldn't be more than 39%" of gross household income and total debt "shouldn't be more than 44%." For uninsured mortgages (20% or more down), each lender applies its own credit policy, which can be stricter or looser on individual items. Treat 39% and 44% as the outside edges, not a target.
This is the detail that surprises people. The principal and interest used in GDS and TDS are calculated at the stress-test qualifying rate, not the rate you will actually pay. So your ratios look worse on paper than your budget will in real life. Our mortgage stress test guide covers how that rate is set. The rest of this article focuses on the ratios themselves.
Here is a household buying a condo, with every input labelled. The property costs and debts are hypothetical numbers chosen to be easy to follow.
39% of $11,666.67 is $4,550. Take away taxes ($300), heating ($120) and half the strata fee ($280), and $3,850 a month is left for principal and interest at the qualifying rate.
44% of $11,666.67 is $5,133.33. Take away the same $700 of non-mortgage housing costs and a $450 car payment, and $3,983.33 is left. That is more than the $3,850 GDS allows, so GDS is the binding limit. At a 6.00% qualifying rate over 25 years, $3,850 a month supports a mortgage of about $601,700.
Now make the car payment $850. TDS leaves only $3,583.33 for principal and interest, which is below the GDS figure. TDS now binds, and the maximum mortgage falls to about $560,100. The extra $400 a month of car payment cut borrowing power by roughly $41,600.
| $450 car payment | $850 car payment | |
|---|---|---|
| Room left under GDS (39%) | $3,850.00 | $3,850.00 |
| Room left under TDS (44%) | $3,983.33 | $3,583.33 |
| Binding ratio | GDS | TDS |
| Approximate maximum mortgage | $601,700 | $560,100 |
These figures are arithmetic, not an approval. Lenders also look at credit history, down payment, the property and their own policies. You can plug in your own numbers with our affordability calculator.
Only half of the strata fee goes into GDS under CMHC's rules. That helps, but high fees still matter. In a building with a large monthly fee, the 50% share can take a meaningful bite out of your mortgage room. Compare fees between buildings before you fall for a unit. Our condo mortgage page covers other strata checks.
If the home sits on leased land, CMHC counts the annual site lease in both ratios. Ask for the lease payment amount early, because it is easy to overlook in a listing.
Lenders need a property tax figure even before you own the home, usually from the listing or the latest tax notice. Heating is often an estimate under the lender's own method rather than your actual bill.
FCAC lists child and spousal support among the debts in TDS. A loan you co-signed for someone else may also show on your credit report and count against you, so raise it with your broker at the start.
Because the qualifying rate is fixed by the rules, the ratios only move when income, debts or the property change.
If you are self-employed, how your income is documented will drive the income side of the ratio. See our self-employed mortgage page.
For individual borrowers, GDS and TDS (calculated at the qualifying rate) are the main affordability tests. In November 2024, OSFI introduced loan-to-income limits for federally regulated lenders. OSFI states that "these limits do not apply to individual borrowers or transactions." They cap the share of high loan-to-income uninsured mortgages a lender holds across its whole portfolio. So under that rule there is no fixed income multiple applied to your own application; GDS and TDS remain the tests you need to pass.
When you are ready to see your own ratios, a pre-approval runs them on your actual documents.
GDS (gross debt service) is your monthly housing cost (principal, interest, property taxes, heating, 50% of condo fees and any site lease) as a share of gross household income. TDS (total debt service) adds all your other debt payments, such as car loans, credit cards, lines of credit, student loans and support payments.
For insured mortgages, CMHC sets the maximums at 39% of gross household income for GDS and 44% for TDS. FCAC uses the same 39% and 44% as a guide. Uninsured lenders apply their own credit policies.
Yes, but only half. CMHC counts 50% of applicable condominium fees in both GDS and TDS. For leasehold property, the annual site lease is included as well.
No. The principal and interest in the ratios are calculated at the stress-test qualifying rate, which is higher than your contract rate. That is why your ratios look tighter on paper than your real monthly budget.
Pay down or clear monthly debt payments such as car loans and lines of credit, add a qualified co-borrower, increase your down payment, or choose a home with lower taxes and strata fees. Each of these frees up room under the 44% limit.
Rules as of October 2026, from CMHC, FCAC and OSFI. Example figures are hypothetical and are arithmetic, not quotes.
This is general information, not financial advice. Speak to a licensed mortgage professional about your situation.
Related guide: 30-Year Amortization: Who Qualifies
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