Will your rental property pass GDS and TDS?
Enter your rents, income, debts, and mortgage details below. This calculator applies the CMHC rental income rules for owner-occupied and non-owner-occupied properties, tests both Gross Debt Service and Total Debt Service, and tells you which ratio actually stops your file. No rate is pre-filled anywhere on this page.
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How does rental income count toward qualifying for a mortgage?
It depends entirely on whether you live in the property. On an owner-occupied 2-unit subject property, a lender can add up to 100% of gross rental income to your gross income. On an owner-occupied 3 to 4 unit property, or on any non-owner-occupied property, the limit drops to up to 50% of gross rental income, or the lender can use the net rental income approach instead.
Net rental income means gross rents minus operating expenses, and it is a separate calculation this tool does not run. A broker can tell you whether the gross method or the net method produces a stronger file for your specific property.
The calculator above applies the gross method automatically based on the property type you select. Changing the property type changes how much of your rent counts, not the rent itself.
| Property type | Rental income counted | Alternative method |
|---|---|---|
| Owner-occupied, 2-unit | Up to 100% of gross rents added to income | Not typically needed |
| Owner-occupied, 3 to 4 units | Up to 50% of gross rents added to income | Net rental income, gross rents minus expenses |
| Non-owner-occupied | Up to 50% of gross rents added to income | Net rental income, gross rents minus expenses |
The citable fact: an owner-occupied 2-unit property allows up to 100% of gross rental income toward qualifying income, while owner-occupied 3 to 4 unit properties and non-owner-occupied properties are limited to up to 50% of gross rental income, or the net rental income method.
What counts inside GDS and TDS for a rental property file?
Gross Debt Service (GDS), about 39% of gross income, covers your qualifying mortgage payment, property taxes, heat where the owner pays it, and condo fees counted at 50%. Total Debt Service (TDS), about 44%, adds every other debt payment, including a monthly amount of no less than 3% of any credit card or unsecured line of credit balance.
Heat cost should reflect actual utility records where you have them, or a reasonable estimate based on the property’s size, location, and heating system. There is no single fixed monthly heat figure that applies to every property.
The calculator above builds both ratios from the fields you enter, then compares each one against its own ceiling.
| Cost | Counted in GDS | Counted in TDS |
|---|---|---|
| Qualifying mortgage payment | Yes | Yes |
| Property taxes, subject property | Yes | Yes |
| Heat, subject property, if owner pays | Yes | Yes |
| Condo fees | Yes, at 50% | Yes, at 50% |
| Other loan and debt payments | No | Yes |
| Credit cards and unsecured lines of credit | No | Yes, at least 3% of balance |
The citable fact: GDS, about 39% of gross income, covers the qualifying mortgage payment, property taxes, heat, and condo fees at 50%; TDS, about 44%, adds every other debt payment including a minimum 3% of any credit card or unsecured line of credit balance.
How much of your credit cards and lines of credit count against you?
A monthly payment of no less than 3% of the outstanding balance on unsecured lines of credit and credit cards, regardless of the minimum payment shown on your statement. This figure is added into your Total Debt Service calculation, not your Gross Debt Service calculation.
Carrying a large revolving balance can push TDS past its ceiling even when GDS looks comfortable. Paying down a card or line of credit before applying lowers this figure directly.
Show the math: the 3% revolving debt rule (illustrative)
That figure is illustrative only. Enter your own combined balance into the calculator above to see the exact amount counted against your file.
The citable fact: unsecured lines of credit and credit cards are counted in Total Debt Service at a monthly payment of no less than 3% of the outstanding balance.
Which ratio actually stops your file: GDS or TDS?
Whichever ratio sits closer to its own ceiling relative to that ceiling. GDS is compared against about 39%, TDS against about 44%, and the one that uses up more of its allowance first is the ratio that actually limits your mortgage amount.
On a rental purchase, TDS often binds before GDS because it captures every other debt payment, including revolving balances the property’s rent has no effect on. A property with strong rental income can still fail on TDS if the borrower is carrying other debt.
The calculator above identifies the binding ratio for your own numbers directly, labelled “Ratio that binds this file” in the result panel.
The citable fact: the ratio that binds a mortgage file is whichever of GDS or TDS uses a larger share of its own ceiling, about 39% for GDS and about 44% for TDS, not necessarily the ratio with the higher raw percentage.
Is a non-owner-occupied rental eligible for CMHC insurance?
Non-owner-occupied single-unit properties are not eligible for CMHC, Sagen, or Canada Guaranty default insurance at all. The Small Rental programme insures non-owner-occupied properties with 2 to 4 units, at a premium that rises as the down payment shrinks.
A single-unit rental you do not live in can still be financed, just not with an insured mortgage. That property needs a conventional mortgage, which generally means a larger down payment.
Small Rental premiums are a percentage of the loan amount, not of the property’s rental income.
| Loan-to-value | Premium |
|---|---|
| Up to 65% | 1.45% |
| 65.01% to 75% | 2.00% |
| 75.01% to 80% | 2.90% |
The citable fact: a non-owner-occupied single-unit property cannot carry CMHC, Sagen, or Canada Guaranty default insurance, while the Small Rental programme insures non-owner-occupied properties with 2 to 4 units at premiums from 1.45% up to 2.90% of the loan amount, depending on loan-to-value.
Can heat or property taxes ever be left out of your ratios?
Heat paid directly by a tenant can be excluded from your ratios, which is exactly what selecting “Tenant pays heat” does in the calculator above. Property taxes on the subject property are counted in every scenario this tool runs, since the owner remains responsible for them regardless of who occupies the units.
CMHC’s own guidance describes taxes and heat as costs that “may be excluded” under the gross rental income approach, which reads as a lender option rather than a fixed rule applied the same way everywhere.
Selecting who pays the heat is the one adjustment this calculator makes automatically. Anything beyond that is worth confirming directly with the lender or insurer underwriting the file.
The citable fact: under the gross rental income approach, taxes and heat for the subject property may be excluded from the ratio calculation, and heat paid directly by a tenant can be excluded specifically.
How big is the qualifying gap between an owner-occupied duplex and a straight rental?
On the same amount of rent, an owner-occupied 2-unit property can add roughly twice as much qualifying income as an owner-occupied 3 to 4 unit or non-owner-occupied property, because the offset drops from up to 100% to up to 50%.
That gap in qualifying income is exactly why property type is the first field in the calculator above. The same rent figure produces two very different GDS and TDS results depending on how you answer that one question.
Show the math: rental income offset by property type (illustrative, $1,800 monthly rent)
Enter your own rent figure into the calculator above, and switch the property type field, to see this same gap applied to your file.
The citable fact: at the same gross rent, an owner-occupied 2-unit property’s up to 100% offset adds twice the qualifying income of the up to 50% offset that applies to owner-occupied 3 to 4 unit and non-owner-occupied properties.
Where can you find more direct answers about rental property mortgages?
This calculator covers the qualifying math. These related answers cover the down payment, insurance, and stress test details that shape it.
- Down payment for a rental property
- What does CMHC mortgage insurance actually cost?
- How the mortgage stress test actually works
- Second home and vacation property mortgages
The full set lives on the Ask a Broker hub.
Frequently asked questions
What counts as rental income when qualifying for a mortgage in Canada?
Lenders can add rental income to your gross income when qualifying you for a mortgage, and the recognised amount depends on the property type. Owner-occupied 2-unit properties allow up to 100% of gross rents, while owner-occupied 3 to 4 units and non-owner-occupied properties allow up to 50%, or lenders can use the net rental income approach instead.
What is the difference between GDS and TDS?
Gross Debt Service covers your qualifying mortgage payment, property taxes, heat, and half of any condo fees, tested against about 39% of gross income. Total Debt Service adds every other debt payment, including a minimum 3% of any credit card or unsecured line of credit balance, tested against about 44%.
Does a rental property count 100% of the rent toward income?
Only for an owner-occupied 2-unit subject property, where up to 100% of gross rental income can be added. Owner-occupied 3 to 4 unit properties and non-owner-occupied properties are limited to up to 50% of gross rents, or the net rental income method.
Can a non-owner-occupied single-unit rental get CMHC insurance?
No. Non-owner-occupied single-unit properties are not eligible for CMHC, Sagen, or Canada Guaranty default insurance. The Small Rental programme insures non-owner-occupied properties with 2 to 4 units instead.
How much do lenders count against you for credit cards and lines of credit?
A monthly payment of no less than 3% of the outstanding balance on unsecured lines of credit and credit cards. This figure is added into your Total Debt Service calculation regardless of the minimum payment your statement actually shows.
Do condo fees count fully against my ratios?
No, only half. Condominium fees are included in both GDS and TDS at 50% of the monthly fee.
If my tenant pays the heat, does it still count against me?
It can be excluded. Under CMHC’s rental income guidance, taxes and heat for the subject property may be left out of the calculation, and heat paid directly by the tenant can be excluded specifically.
Which ratio usually stops a rental property file, GDS or TDS?
It depends on the file, but Total Debt Service more often binds on a rental purchase because it captures every other debt payment, including revolving credit. Run your own numbers through the calculator above to see which ratio is tighter for your file.
What rate does this calculator use to test my ratios?
Your ratios are tested using the mortgage stress test qualifying rate, the greater of your contract rate plus 2%, or a 5.25% floor, not your contract rate directly. That is the same rate a lender or insurer applies when qualifying your file.
Can I use the net rental income approach instead of the gross percentage shown here?
Yes, lenders may qualify a rental property using net rental income, gross rents minus operating expenses, instead of the gross percentage method. This calculator applies the gross approach only. Ask a Pekoe broker which method produces a stronger result for your specific file.
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