Debt-to-Income Ratio Calculator
Canadian mortgage lenders use two debt ratios to assess your borrowing capacity: GDS and TDS.
GDS Ratio (Gross Debt Service)
GDS = (Housing Costs ÷ Gross Income) × 100
Housing costs include:
- Mortgage payment (at stress-tested rate)
- Property taxes
- Heating costs
- 50% of condo fees (if applicable)
Maximum GDS: 39% (most lenders)
GDS Calculation Example
| Component | Monthly Amount |
|---|---|
| Mortgage payment | $2,500 |
| Property taxes | $400 |
| Heating | $150 |
| Condo fees (50%) | $250 |
| Total housing costs | $3,300 |
| Gross monthly income | $10,000 |
| GDS Ratio | 33% ✓ |
TDS Ratio (Total Debt Service)
TDS = (Housing Costs + All Debt Payments) ÷ Gross Income × 100
Other debts include:
- Car loans/leases
- Credit card minimums (3% of balance)
- Lines of credit
- Student loans
- Personal loans
- Child support/alimony
Maximum TDS: 44% (most lenders)
TDS Calculation Example
| Component | Monthly Amount |
|---|---|
| Housing costs (from GDS) | $3,300 |
| Car payment | $450 |
| Credit cards (3% of $5,000) | $150 |
| Student loan | $200 |
| Total debt payments | $4,100 |
| Gross monthly income | $10,000 |
| TDS Ratio | 41% ✓ |
Mortgage Debt Ratio Limits by Lender Type
| Lender Type | Max GDS | Max TDS |
|---|---|---|
| Big 5 Banks | 39% | 44% |
| Credit Unions | 39-42% | 44-47% |
| B Lenders | 42-50% | 50%+ |
| Private Lenders | Flexible | Flexible |
Monthly Income Needed by Mortgage Amount
Assuming property taxes $400/mo, heating $150/mo, max 39% GDS:
| Mortgage | Monthly Payment* | Min. Income Needed |
|---|---|---|
| $300,000 | $1,800 | $6,100/month |
| $400,000 | $2,400 | $7,600/month |
| $500,000 | $3,000 | $9,100/month |
| $600,000 | $3,600 | $10,600/month |
| $700,000 | $4,200 | $12,200/month |
| $800,000 | $4,800 | $13,700/month |
*At 6.5% stress test rate, 25-year amortization
How to Improve Your Debt Ratios
Lower your GDS
- Buy a less expensive home
- Make a larger down payment
- Choose a longer amortization (30 years)
- Buy where property taxes are lower
Lower your TDS
- Pay off car loans before applying
- Pay down credit card balances
- Consolidate high-interest debt
- Close unused credit accounts
Stress Test Impact on DTI
Canadian mortgage rules require qualifying at the higher of:
- Your contract rate + 2%, OR
- The 5-year benchmark rate (currently ~5.25%)
| Actual Rate | Stress Test Rate | Payment Difference |
|---|---|---|
| 5.0% | 7.0% | +19% |
| 5.5% | 7.5% | +15% |
| 6.0% | 8.0% | +12% |
This means your ratios are calculated using higher payments than you’ll actually make.