How Debt Service Ratios (GDS and TDS) Affect Mortgages in Canada

Jul 8, 2025

Your gross debt service (GDS) ratio is your housing costs divided by pre-tax income. Your total debt service (TDS) ratio includes payments on any other debts you may owe.

Written by Kurt Woock

Lead Writer & Content Strategist

Edited by Beth Buczynski

Head of Content, New Markets

Written by Kurt Woock

Lead Writer & Content Strategist

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Canadian lenders won’t lend money to buy a house if your mortgage payment takes up too much of your income. Lenders will only lend you money if they think you’ll be able to pay it back.

To calculate where a mortgage payment goes from being affordable to being unaffordable, lenders take into account two ratios.

One ratio compares your mortgage payment to your income. Another that compares your mortgage payment in addition to other debt payments to your income. If you apply for a mortgage that exceeds these limits, you’re unlikely to get the loan approved.

Gross debt service ratio

Your gross debt service (GDS) ratio is your housing costs divided by pre-tax income. In general, lenders don’t want your GDS ratio to exceed 39% of your household income.

Housing expenses include:

Mortgage payments (principal and interest, and mortgage insurance costs).
Property taxes.
Heating costs.
50% of condo maintenance fees (if any).
Secondary financing payments (if applicable).
Ground rent (if applicable).

Total debt service ratio

Your total debt service (TDS) ratio includes payments on any other debts you may owe. In most cases, lenders set a limit of 40-44% for your TDS ratio.

Debts can include:

Auto loans.
Student debt.
Credit card payments.
Child support/alimony.

What to do if your GDS or TDS exceeds the limits

It’s important to understand that the GDS and TDS ratios are typically guidelines and not hard rules. If you speak to your financial institution or mortgage broker, they may have a solution to help you.

Alternatively, you could try one of the following things:

Pay down debt. If you reduce your debt, your TDS ratio will decrease.
Save a bigger down payment. Saving more money for your down payment will reduce how much you need to borrow, reducing your GDS and TDS ratios.
Reduce your budget. Looking for homes with a cheaper purchase price will lower your GDS and TDS ratios.
Shop around. Some lenders use different criteria when determining how creditworthy you are.

Having low debt service ratios tells lenders that you can reasonably afford a home. While this number isn’t foolproof, it’s a good estimate for everyone involved. Stay under the recommended ratio limits, and you likely won’t have any issues paying your mortgage.