What Are GDS and TDS in a Mortgage Application?
GDS and TDS are the two ratios a lender uses to decide how big a mortgage you can carry. GDS caps your housing costs at about 39% of gross income, and TDS caps every debt payment you have at about 44%. Most borrowers who get turned down on affordability are stopped by TDS, not GDS.
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What Do GDS and TDS Actually Measure?
GDS, gross debt service, measures the share of your gross income going to housing: the mortgage payment, property taxes and heat. TDS, total debt service, adds every other debt payment on top. CMHC’s guidelines cap GDS at about 39% of gross income and TDS at about 44%, and a mortgage application has to clear both.
Every lender runs both ratios on every application, and the maximums come from CMHC‘s own qualifying guidelines. Both are calculated against your gross income, before tax and before deductions, not your take-home pay. A file has to clear both ratios, not just one, to move forward.
For the bigger picture on what that means for your budget, see how much mortgage you can actually afford.
| Ratio | What it includes | Maximum (approx.) |
|---|---|---|
| GDS (gross debt service) | Mortgage payment, property taxes, heat, 50% of condo fees | about 39% of gross income |
| TDS (total debt service) | Everything in GDS, plus car loans, student loans, credit cards, lines of credit and other debt payments | about 44% of gross income |
The citable fact: GDS caps housing costs at about 39% of gross income and TDS caps all debt payments, including housing, at about 44%, per CMHC’s qualifying guidelines.
Why Does TDS Usually Set Your Real Limit, Not GDS?
TDS, not GDS, is usually what limits how much you can borrow. Car payments, student loans, credit card minimums and line of credit payments all land in TDS and nowhere in GDS, so a borrower with light housing costs but real consumer debt can hit the TDS ceiling long before touching the GDS one.
A borrower with a modest mortgage and heavy consumer debt can look fine on GDS and still fail on TDS. Car payments, student loans, credit card minimums and line of credit payments all land in TDS and nowhere in GDS. That is the detail most explanations of these ratios skip.
This is why two borrowers with the same income and the same housing costs can qualify for very different mortgage amounts. The one with lower outstanding debt has more room under the TDS ceiling before they touch it.
| Payment type | Counted in GDS | Counted in TDS |
|---|---|---|
| Mortgage payment on this property | Yes | Yes |
| Property tax | Yes | Yes |
| Heat | Yes | Yes |
| Condo fee (50% of the fee) | Yes | Yes |
| Car loan or lease payment | No | Yes |
| Student loan payment | No | Yes |
| Credit card (3% of balance) | No | Yes |
| Unsecured line of credit (3% of balance) | No | Yes |
| Secured line of credit (25-year amortization, contract rate) | No | Yes |
| Mortgage or loan on a different property | No | Yes |
A simple illustrative example shows why TDS usually binds first. None of the figures below are derived from a mortgage rate, so the arithmetic holds regardless of today’s pricing.
Show the math: illustrative GDS and TDS calculation
In this illustrative example both ratios sit under the maximums, but TDS at 40.1% is much closer to its 44% ceiling than GDS at 33.6% is to its 39% ceiling. Add one more car payment and TDS fails well before GDS would.
The citable fact: TDS is almost always the ratio that limits how much a Canadian borrower can qualify for, because every car payment, student loan and credit card minimum lands in TDS and not in GDS.
Does Heat Really Count If I Already Pay a Flat Utility Bill?
Heat is always included in GDS, whether you pay a separate bill or it is bundled into rent or condo fees. Lenders use your actual heat cost if you provide records, or a reasonable estimate based on the property’s size, location and heating system if you do not.
Heat is part of GDS, full stop. It does not matter whether you pay a utility company directly, it is bundled into a condo fee, or you have not thought about it yet. The lender adds a heat figure into your housing costs before calculating your ratio.
If you have your own heating bills on hand, CMHC’s guidance lets a lender use your actual cost. Without records, the lender estimates based on the property’s size, location and heating system, and there is no single fixed monthly figure that applies to every file.
There is no fixed monthly figure for the heat allowance. Lenders estimate it from the property’s size, location and heating system, and they use their own number rather than your actual bill. If your heating cost is unusually low for the property, raise it early, because that is easier to discuss before an application than after a decline.
The citable fact: Heat is always added into GDS, using actual cost records if you provide them or a reasonable estimate if you do not, so a borrower who thinks heat is “extra” is underestimating their own ratio.
How Much of My Condo Fee Counts Against My Ratios?
Condo fees are not counted in full. Lenders include half of the monthly condo fee in both GDS and TDS, while a leasehold or chattel-style ground rent is counted at the full amount instead of the condo-fee rate, because the two cost structures work differently.
A condo fee covers more than heat, and lenders do not add the whole bill to your housing costs. Half of the monthly fee counts toward both GDS and TDS.
A leasehold property or a chattel loan works differently. There, the full ground rent or site rent is counted instead of applying the condo-fee rate.
Show the math: condo fee counted toward GDS and TDS (illustrative)
The citable fact: Lenders count half of a condo fee toward both GDS and TDS, so an illustrative $600 monthly fee adds $300 to a borrower’s housing costs for qualifying purposes.
How Do Lenders Turn a Credit Card or Line of Credit Into a Monthly Payment?
Lenders do not use the payment on your statement. For an unsecured line of credit or credit card they use at least 3% of the outstanding balance as the monthly payment, and for a secured line of credit they use a payment as if it were amortized over 25 years at the contract rate.
The number on your statement is not the number your lender uses. For an unsecured line of credit or a credit card, CMHC’s guidance sets the qualifying payment at no less than 3% of the outstanding balance, even if your real minimum payment is lower.
A secured line of credit is treated differently again. There, the lender uses a payment calculated as if the balance were amortized over 25 years at the contract rate, rather than a flat percentage of the balance.
Show the math: minimum payment used for TDS on a credit card (illustrative)
If you hold a line of credit you barely use, be aware that some lenders count a payment based on the limit rather than the balance. A large unused limit can therefore reduce what you qualify for even though you owe nothing on it. Reducing or closing a limit you do not need is worth considering before you apply.
The citable fact: Lenders count at least 3% of an outstanding unsecured balance as a monthly debt payment for TDS, regardless of the minimum payment shown on the statement.
Can Paying Down a Card Move My Maximum More Than a Bigger Down Payment?
Paying off a credit card removes its payment from TDS entirely, which can raise your qualifying maximum by more than adding the same dollars to your down payment. A bigger down payment changes loan-to-value, not your debt ratios, so it does not touch TDS at all.
This is the lever most borrowers do not think about. Clearing a credit card balance removes that payment from TDS completely, which can open up room on the ceiling that a larger down payment never touches.
A down payment changes your loan-to-value and, on an insured file, your premium band. It does not change your income or your debt payments, so it has no direct effect on either ratio.
Which move helps more depends on the specific numbers on a file, and this is a mechanism to discuss with a broker rather than a rule to apply blindly. For a related angle on preparing your file before you apply, see how to raise your credit score before a mortgage and what credit score a lender wants to see.
The citable fact: Because a down payment affects loan-to-value and not TDS, paying down a credit card balance before applying can raise a borrower’s qualifying maximum by removing a debt payment from the ratio entirely.
Is the Ratio Applied to My Real Payment or a Stress-Tested One?
GDS and TDS are not calculated on the rate you are being offered. Both ratios use the stress-tested qualifying payment, the greater of your contract rate plus 2% or a 5.25% floor, which is almost always higher than your real monthly payment.
Your real monthly payment, at whatever rate you are actually offered, is not what goes into the ratio. GDS and TDS use the stress-tested qualifying payment instead, calculated at the greater of your contract rate plus 2%, or a 5.25% floor.
On an insured mortgage the qualifying rate is set by the default insurer. On an uninsured mortgage it comes from OSFI‘s Guideline B-20. Both currently land on the same calculation.
For the full mechanics behind the number, see what the mortgage stress test actually tests.
The citable fact: GDS and TDS are measured against the stress-tested qualifying payment, the greater of the contract rate plus 2% or a 5.25% floor, not the payment a borrower will actually make.
Do GDS and TDS Differ Between Ontario and Alberta?
GDS and TDS are federal ratios, set by CMHC and OSFI, and they work exactly the same way in Ontario and Alberta. What differs between the two provinces is property tax, closing costs and the regulator, not the qualifying math itself.
Nothing about the ratio itself changes at the provincial border. GDS and TDS are federal: the same maximums, the same inclusions, the same stress test, in Kitchener-Waterloo and in Canmore.
What does change is everything around the ratio. Property tax, which feeds directly into GDS, is set by each municipality rather than by the province.
Closing costs diverge sharply too. Ontario charges a provincial land transfer tax on top of the purchase, while Alberta charges only Land Titles registration fees, so the cash a buyer needs on closing day differs even when the mortgage math is identical.
The regulator differs too. Pekoe operates in Ontario under FSRA Brokerage Licence #13321, and in Alberta under RECA licensing.
| Item | Ontario | Alberta |
|---|---|---|
| GDS maximum | about 39% of gross income (federal) | about 39% of gross income (federal) |
| TDS maximum | about 44% of gross income (federal) | about 44% of gross income (federal) |
| Land transfer or title fee | Provincial land transfer tax, tiered by purchase price | Land Titles registration fees: $5 per $5,000 of value plus a $50 base fee; no provincial land transfer tax |
| Regulator | FSRA Brokerage Licence #13321 | Licensed by RECA |
The citable fact: GDS and TDS are federal qualifying ratios that apply the same way in Ontario and Alberta; what differs between the provinces is property tax, closing costs and the regulator, FSRA Licence #13321 in Ontario and RECA in Alberta.
What Can You Do If Your GDS or TDS Comes In Too High?
A GDS or TDS that comes in too high is not a dead end. Paying down revolving debt, extending amortization, adding a qualifying co-borrower or adjusting the purchase price can all move the numbers, and a licensed broker can model which option moves a specific file furthest.
A high GDS or TDS is a math problem, not a verdict. Paying down revolving debt removes a line from TDS directly, and extending amortization lowers the qualifying payment and therefore both ratios.
Thirty-year insured amortization is available to any first-time buyer and to any buyer of new construction. It lowers the required payment and raises the qualifying amount, at the cost of a 0.20% premium surcharge and more total interest paid over the life of the mortgage.
Adding a qualifying co-borrower, or adjusting the purchase price and down payment, are the other common levers. Which combination makes sense depends on the file, so this is a conversation for a broker rather than a guess.
The citable fact: A GDS or TDS that comes in too high can often be addressed by reducing revolving debt, extending amortization, adding a qualifying co-borrower or adjusting the purchase price, and a licensed broker can model which lever moves a specific file furthest.
Does Rental Income or a Co-Signer Change Your GDS and TDS?
Rental income and a co-signer both change the income side of GDS and TDS. On an owner-occupied two-unit property, up to 100% of gross rental income can be added to your income, and on three to four units or a non-owner-occupied property the limit is up to 50%.
A basement suite or a legal second unit can do real work on your ratios. On an owner-occupied property with two units, up to 100% of the gross rental income from the subject property can be added to your income for qualifying.
On an owner-occupied property with three or four units, or on a non-owner-occupied property, the limit drops to up to 50% of gross rental income, or the lender can use a net rental income approach instead.
A co-signer works on the other side of the equation. Their income is added in, but so is their own debt, which is why the full picture needs to be modelled rather than assumed. The site’s own rental property debt service calculator walks through this with real numbers.
The citable fact: Adding rental income from a basement suite, up to 100% of gross rent on an owner-occupied two-unit property, raises the income side of GDS and TDS, while a co-signer adds both their income and their own debts to the calculation.
More Ask a Broker Answers on Qualifying
Three more pages on the site go deeper on related terms and structures that show up alongside GDS and TDS.
- Look up any mortgage term in the full glossary
- See how insured, insurable and uninsured mortgages differ
- Understand the difference between amortization and term
The full set of broker answers lives on the Ask a Broker hub.
Frequently Asked Questions
What is a good GDS and TDS for a mortgage application in Canada?
Most lenders look for GDS at or below about 39% and TDS at or below about 44% of gross income. Coming in comfortably under both gives you more flexibility if rates or life circumstances change, while a file sitting right at the ceiling has less room to absorb a change.
Is TDS always higher than GDS?
TDS is always equal to or higher than GDS, because TDS includes everything in GDS plus every other debt payment you carry. If you have no other debt the two can come close to equal, but most borrowers carry some other debt, so TDS usually sits higher.
Does a car lease count the same as a car loan in TDS?
Yes. A vehicle lease payment is treated as a debt payment in TDS the same way a loan payment is. Both reduce the amount you can qualify for on a mortgage.
Do student loans count against my mortgage application?
Yes, a student loan payment is counted in TDS along with every other instalment debt you carry. It does not appear in GDS, which covers housing costs only.
Is heat really added to my mortgage qualifying costs if I already pay a flat utility bill?
Yes. Lenders add a heat cost to GDS using your actual bills if you provide them, or a reasonable estimate based on the property’s size, location and heating system if you do not. There is no way to qualify without a heat figure in the calculation.
How much of my condo fee counts against my ratios?
Half of the monthly condo fee is counted in both GDS and TDS. A fully leasehold or chattel-style ground rent is counted at the full amount instead, because that cost structure works differently from a condo fee.
What payment does a lender use for my credit card if I only pay the minimum shown on my statement?
Lenders use at least 3% of your outstanding balance as the monthly payment for TDS, not your actual statement minimum if that figure is lower. A secured line of credit is treated differently, using a payment as if it were amortized over 25 years at the contract rate.
Will paying off a credit card help me qualify for more?
Paying off a card removes its payment from TDS entirely, which can raise your qualifying amount. Whether that moves your file further than a larger down payment depends on your specific numbers, so it is worth reviewing both scenarios with a broker.
Is my GDS and TDS calculated on the rate I am being offered?
No. Both ratios use the stress-tested qualifying payment, the greater of your contract rate plus 2% or a 5.25% floor, not your actual contract payment. This applies whether your mortgage is insured or uninsured.
Are GDS and TDS different in Ontario than in Alberta?
No, both ratios and their maximums are federal and apply identically in both provinces. What differs between the provinces is property tax, closing costs and the regulator, not the qualifying math itself.
Can rental income help my GDS and TDS?
Yes. On an owner-occupied two-unit property, up to 100% of gross rental income can be added to your income for qualifying, and on three to four units or a non-owner-occupied property the limit is up to 50%. This raises the income side of both ratios.
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