# How are debt service ratios (GDS/TDS) used in mortgage qualification?

> Debt service ratios, including Gross Debt Service (GDS) and Total Debt Service (TDS), are critical metrics used to assess a borrower's ability to manage mortgage payments and other debt obligations.

Category: Strategy
Last verified: 2026-02-18
Source: https://ratellow.com/faqs/strategy/how-are-debt-service-ratios-gdstds-used-in-mortgage-qualification

## Answer
| Ratio | Description | Typical Threshold |
|-------|-------------|--------------------|
| GDS   | Housing costs / Gross income | < 39%              |
| TDS   | Total debt / Gross income | < 44%              |

## Institutional highlights
- When lenders check if you can afford a mortgage, they use calculations that assume interest rates might go up, so you're prepared.
- If you have a mortgage with default insurance, the lender must follow the insurer's rules about how much debt you can handle.
- For mortgages without default insurance, lenders should think about your current situation and what might happen in the future when deciding if you qualify.
- To qualify for a mortgage without insurance, you'll likely need to pass a 'stress test' using either your mortgage interest rate plus 2%, or a minimum rate - whichever is higher.
- Lenders need clear rules about what counts towards your debt, like your income, property taxes, and other loans you have.

## Related guide
- https://ratellow.com/guides/mortgage-prepayment-privileges

## Sources
- 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
- Mortgage Insurance Prepay and Re-Advance Policy — https://www.sagen.ca/ups/underwriting-documentation/#mortgage-insurance-prepay-and-re-advance-policy-638f55989d20b
- Disclosure requirements — https://www.osfi-bsif.gc.ca/en/guidance/guidance-library/residential-mortgage-underwriting-practices-procedures-guideline-2017#3.1