# How do GDS and TDS ratios affect my refinancing options?

> GDS (Gross Debt Service) and TDS (Total Debt Service) ratios are critical affordability indicators that financial institutions use to determine your eligibility for refinancing.

Category: Refinance
Last verified: 2026-04-14
Source: https://ratellow.com/faqs/refinance/how-do-gds-and-tds-ratios-affect-my-refinancing-options

## Answer
### GDS/TDS Formula
> **GDS** = (Principal + Interest + Taxes + Heat + 50% Condo Fees) / Gross Income
> **TDS** = (PITH + Other Debts) / Gross Income

### Calculation Breakdown: $500k Refinance Scenario
Consider a household with **$100,000 gross annual income** ($8,333/mo) refinancing into a $500,000 mortgage at 4.29% (5-year fixed) with a qualifying rate of 6.25% (stress test):

| Component | Monthly Amount | Notes |
|---|---|---|
| Principal & Interest | $3,232 | Based on 6.25% qualifying rate over 25 years |
| Property Taxes | $333 | Estimated $4,000 annually |
| Heating Costs | $100 | Standard estimate |
| **Housing Total (PITH)** | **$3,665** | Total core housing costs |
| Other Debts (Car, Credit) | $500 | Assumed external obligations |
| **Total Debt Load** | **$4,165** | Total monthly obligations |

**Resulting Ratios:**
- **GDS: 44.0%** ($3,665 / $8,333) — *Fail (Threshold ≤ 39%)*
- **TDS: 50.0%** ($4,165 / $8,333) — *Fail (Threshold ≤ 44.0%)*

In this scenario, both the housing costs (GDS) and total debt (TDS) exceed the allowable limits, requiring either a lower loan amount or debt reduction to qualify.

## Institutional highlights
- When you refinance, lenders look at your income and debts conservatively, planning for different financial situations and potentially higher interest rates.
- If your mortgage is insured, the lender must follow the insurer's rules about how much debt you can handle.
- For uninsured mortgages, lenders will carefully assess your ability to repay, considering current and future financial conditions.
- To qualify for refinancing without insurance, you'll generally need to qualify at your mortgage interest rate plus a buffer, or a set minimum qualifying rate, whichever is higher.
- Lenders have specific guidelines on how your income and debts affect your ability to refinance, so ask them to explain their policies.

## Related guide
- https://ratellow.com/guides/refinance-break-even

## Sources
- Debt service coverage — https://www.osfi-bsif.gc.ca/en/guidance/guidance-library/residential-mortgage-underwriting-practices-procedures-guideline-2017#2.3.3
- LTV Ratio Frameworks — https://www.osfi-bsif.gc.ca/en/guidance/guidance-library/residential-mortgage-underwriting-practices-procedures-guideline-2017#2.4.3
- OSFI exempts uninsured mortgage straight switches from the prescribed MQR and implements portfolio LTI limits — https://www.osfi-bsif.gc.ca/en/guidance/guidance-library/osfi-exempts-uninsured-mortgage-straight-switches-prescribed-mqr-implements-portfolio-lti-limits