# What are the key debt service ratios and qualifying rates lenders use?

> Debt service ratios (GDS/TDS) and qualifying rates are key to determining mortgage affordability.

Category: Financing
Last verified: 2026-04-14
Source: https://ratellow.com/faqs/financing/what-are-the-key-debt-service-ratios-and-qualifying-rates-lenders-use

## Answer
Here's a breakdown of the key ratios and rates:

| Metric               | Description                                                                                               |
|-----------------------|-----------------------------------------------------------------------------------------------------------|
| Gross Debt Service (GDS) | Percentage of gross monthly income for housing costs (mortgage, property taxes, heating).                   |
| Total Debt Service (TDS) | Includes all debt obligations (car loans, credit card payments) in addition to housing costs.           |
| Qualifying Rate       | Rate used to stress test borrowers; the greater of the contractual rate + buffer or a minimum floor rate.   |

## Institutional highlights
- Lenders use debt-to-income ratios to see if you can afford your mortgage payments and other debts.
- These ratios are calculated carefully, so you should still be prepared for surprise costs.
- To qualify for a mortgage without mortgage insurance, lenders use either your mortgage interest rate plus 2%, or a minimum rate - whichever is higher.
- Mortgage insurance protects lenders if you can't pay your mortgage.
- You can usually borrow up to 80% of your home's value with a Home Equity Line of Credit (HELOC).

## Related guide
- https://ratellow.com/guides/cosigning-vs-guarantor

## Sources
- Guarantors and co-signors of mortgages — https://www.osfi-bsif.gc.ca/en/guidance/guidance-library/residential-mortgage-underwriting-practices-procedures-guideline-2017#2.3.2
- Footnotes — https://www.osfi-bsif.gc.ca/en/guidance/guidance-library/capital-adequacy-requirements-car-guideline-2026
- Canada Guaranty — https://www.canadaguaranty.ca/lenders/underwriting-guidelines/
- I. Purpose and scope of the guideline — https://www.osfi-bsif.gc.ca/en/guidance/guidance-library/residential-mortgage-underwriting-practices-procedures-guideline-2017#1.0