# How will lenders evaluate my debt service ratios, and what key factors are considered?

> Lenders assess your ability to repay the mortgage by calculating your Gross Debt Service (GDS) and Total Debt Service (TDS) ratios.

Category: Purchasing
Last verified: 2026-02-18
Source: https://ratellow.com/faqs/purchasing/how-will-lenders-evaluate-my-debt-service-ratios-and-what-key-factors-are-considered

## Answer
Let's consider Mark's scenario:

| Housing Cost | Monthly Amount |
|---|---|
| Mortgage Payment | $2,000 |
| Property Taxes | $300 |
| Heating | $100 |
| **Housing Total (PITH)** | **$2,400** |
| Car Loan | $500 |
| **Total Debts** | **$2,900** |
| Gross Income | $6,000 |

**Result:** GDS = 40% (housing) · TDS = 48.33% (all debt)

*Maximum thresholds: GDS ≤ 39%, TDS ≤ 44%*

Mark's ratios exceed the typical maximums, which means he may need to reduce debt, increase income, or adjust his home price target to qualify.

## Institutional highlights
- Your debt payments can't be more than 39% of your gross income for housing costs, and 44% for total debt.
- When lenders check if you can afford your mortgage, they'll use either your mortgage interest rate plus 2%, or 5.25%, whichever is higher.
- If you're self-employed, you can still get mortgage insurance if you can prove your income with proper documentation.
- You'll generally need a credit score of at least 600 to qualify, but there are other ways to prove you can handle a mortgage if you don't have a credit history.
- Lenders must follow careful lending practices to ensure they are managing risk responsibly when approving your mortgage.

## Related guide
- https://ratellow.com/guides/insured-advantage

## Sources
- Page 2 — https://assets.cmhc-schl.gc.ca/sf/project/cmhc/pdfs/factsheets/new/cmhc-quick-reference.pdf#page=2
- Page 3 — https://assets.cmhc-schl.gc.ca/sf/project/cmhc/pdfs/factsheets/new/cmhc-quick-reference.pdf#page=3
- Canada Guaranty — https://www.canadaguaranty.ca/lenders/underwriting-guidelines/
- Mortgage insurance — https://www.osfi-bsif.gc.ca/en/guidance/guidance-library/residential-mortgage-underwriting-practices-procedures-guideline-2017#2.5.1