GDS and TDS ratios: the key to approval
Before you even tour homes, banks look at these two ratios. Understanding them helps you strengthen your mortgage application in Canada.
GDS — Gross Debt Service
GDS (ABD in French — Amortissement brut de la dette) is the percentage of your gross income needed to cover housing costs only.
TDS — Total Debt Service
TDS (ATD in French) is broader. It includes your housing costs plus all other debts: car, cards, lines of credit, student loans.
The key limits
Mortgage insurers (CMHC and others) accept a GDS up to 39% and a TDS up to 44% — those are the ceilings of the federal framework. Each lender can still set its own lower limits depending on your file.
Insurer ceiling. In practice, many lenders target closer to 32% when the credit score is below 680.
Insurer ceiling. In practice, many lenders target closer to 40% when the credit score is below 680.
Worked example: GDS passes, TDS blocks
Gross annual income: $85,000 ($7,083/mo)
Mortgage payment: $2,200 · Taxes: $375 · Heating: $100
*Credit card: a $4,000 balance counted at 3% per month (a common lender convention), even if you pay it in full every month. Try the example with your own numbers →
What counts in TDS?
Many buyers forget these items — they can weigh heavily in the calculation.
Car loans
The full monthly payment is used, not the balance.
Credit cards
Often calculated as 3% of the balance — even if you pay in full each month.
Lines of credit
Some unused lines are still factored in.
Student loans
The required minimum monthly payment is included.
Improve your ratios before you apply
Pay down balances
Prioritize small credit card balances. That reduces the notional 3% monthly payment that inflates TDS.
Avoid new purchases
Do not finance a car or furniture before your mortgage closes at the lawyer or notary.
Larger down payment
A bigger down payment reduces the loan amount and mortgage payment — directly improving GDS.
Calculate your ratios now
Use our interactive calculator to estimate your GDS and TDS in real time.
Open the calculator →Keep reading
Credit score
How your score affects qualification and your interest rate.
Down payment
Ways to optimize your down payment and lower GDS.
CMHC insurance premium
Calculate the premium added to your loan when your down payment is under 20% — it is part of your payment, so it counts in your ratios.