# How are GDS and TDS ratios calculated for mortgage qualification?

> GDS (Gross Debt Service) covers housing costs divided by gross income — lenders cap it at 39%. TDS (Total Debt Service) adds all other debts — capped at 44%. Your mortgage size is limited to whichever ratio is hit first.

Category: Qualification
Last verified: 2026-04-19
Source: https://ratellow.com/faqs/qualification/how-are-gds-tds-ratios-calculated-for-mortgage-qualification

## Answer
**GDS and TDS are the two core qualifying ratios every Canadian lender uses to determine how much mortgage you can carry.**

## GDS — Gross Debt Service (39% threshold)

**GDS = (Annual mortgage P+I + Property tax + Heat + 50% of condo fees) ÷ Gross annual income**

- **Mortgage P+I**: Calculated at the stress test rate (higher of contract+2% or 5.25%)
- **Property tax**: Actual annual tax or lender estimate (~1% of value)
- **Heat**: Lenders use a flat estimate (~$150–200/month)
- **50% condo fees**: If applicable

Lenders want GDS ≤ 39%. Borrowers at ≤ 32% GDS often unlock Prime-rate tiers.

## TDS — Total Debt Service (44% threshold)

**TDS = GDS costs + Annual payments on all other debts**

Adds to GDS:
- Car loan / lease payments
- Credit card minimums (3% of balance/month used)
- Student loans
- Spousal/child support
- Other mortgage payments

Lenders want TDS ≤ 44%.

## Why This Matters

Your maximum mortgage is limited by whichever ratio you hit first. A borrower with heavy car loan debt may be TDS-limited even with a high income. Paying off a car loan or credit card before applying can significantly increase your maximum purchase price.

## Quick Example

| Item | Monthly | Annual |
|---|---|---|
| Mortgage P+I (stress test) | $3,200 | $38,400 |
| Property tax | $400 | $4,800 |
| Heat | $150 | $1,800 |
| **GDS** | | **$45,000** |
| Gross income required @ 39% | | **$115,385** |

### Your Next Steps
1. **Calculate your affordability** → [Affordability Calculator](/mortgages/affordability-calculator)
2. **Read the full guide** → [GDS/TDS Qualifying Ratios](/guides/gds-tds-qualifying-ratios)
3. **Speak with a mortgage advisor** to model your specific scenario

## Related guide
- https://ratellow.com/guides/gds-tds-qualifying-ratios

## Sources
- OSFI B-20: GDS/TDS Guidelines — https://www.osfi-bsif.gc.ca/en/guidance/guidance-library/residential-mortgage-underwriting-practices-procedures-guideline-2017#1.0
- Mortgage Qualifier Tool — FCAC — https://www.canada.ca/en/financial-consumer-agency/services/mortgages/mortgage-qualifier.html