QUESTION: How do lenders assess rental income?

Question

Accepted Answer

To determine debt serviceability, lenders often use Gross Debt Service (GDS) and Total Debt Service (TDS) ratios. These ratios compare a borrower's income to their debt obligations. It's a financial health check!

Here's a breakdown of these key ratios:

| Ratio | Calculation | Description | Example | 
|---|---|---|---| 
| **GDS (Gross Debt Service)** | (Mortgage Payments + Property Taxes + Heating Costs + Condo Fees) / Gross Income | Measures the percentage of gross income used for housing costs. | Maximum GDS typically around 39% | 
| **TDS (Total Debt Service)** | (Total Debt Payments, including Mortgage, Loans, Credit Cards) / Gross Income | Measures the percentage of gross income used for all debt obligations. | Maximum TDS typically around 44% |

For example, a $500,000 mortgage can become much easier to manage with even a modest amount of verified rental income, as it directly improves these ratios, increasing the likelihood of approval. Every bit counts!

QUESTION: How do lenders assess rental income?

Key Points

Need a Deeper Breakdown?

Technical Research Verification

Rental Income Offset vs. Add-Back: How Canadian Lenders Qualify Rental Income in 2026

Related Questions

What are the critical mortgage underwriting principles for FRFIs?

How does B-20 affect Home Equity Lines of Credit (HELOCs)?

What documentation is necessary for a mortgage application?

QUESTION: What down payment is required when using Rental Property?

QUESTION: How do lenders assess rental income?

Key Points

Need a Deeper Breakdown?

Technical Research Verification

Rental Income Offset vs. Add-Back: How Canadian Lenders Qualify Rental Income in 2026

Related Questions

What are the critical mortgage underwriting principles for FRFIs?

How does B-20 affect Home Equity Lines of Credit (HELOCs)?

What documentation is necessary for a mortgage application?

QUESTION: What down payment is required when using Rental Property?