What is GDS and TDS?

It’s actually quite simple…


There have always been two recognized methods used by the bank to measure a borrowers ability to pay.  There is GDS and TDS, here’s a run down of how they work.

GDS RATIO (Gross Debt Service Ratio):

The percentage of gross annual income required to cover payments associated with housing. Payments include mortgage principal, interest, property taxes and sometimes include secondary financing, heating, condominium fees or pad rent.  Lenders peg this ratio at 32%.

TDS RATIO (Total debt service ratio):

The percentage of gross annual income required to cover payments associated with housing and all other debts and obligations, such as car loans and credit cards.  Lenders typically peg this ratio at 40%.

Example – GDS – Gross Debt Service Ratio

Monthly mortgage payment:
(principal and interest)*
Property taxes: (monthly) $250.00
Heating costs: (monthly) $125.00
Other:** $75.00
Total monthly payments: $1,741.63
Gross monthly household income: $8,000.00
GDS = (Total monthly payments /Gross monthly income)*100
GDS = ($1,741.63 /$8,000.00)*100 = 24.95%

Principal and interest must be based on the total insured loan amount, including CMHC
insurance premium (if you choose to add the premium to your mortgage and not to pay the premium up front).

** If you are purchasing a condominium, you must include 50% of the monthly condominium fee. If the mortgage is for a mobile home (chattel mortgage) include 100% of the monthly site (pad) rent.

Example – TDS – Total Debt Service Ratio

Total monthly housing payments:(from GDS calculation):* $1,741.63
Other debts:(personal loans, car loans, credit cards, etc.): $650.00
Total monthly debts: $2,391.63
Gross monthly household income: $8,000.00
TDS = (Total monthly payments /Gross monthly income)*100
TDS = ($2,391.63 /$8,000.00)*100 = 29.90%


How much can you afford?

Want to know where you stand? With a few simple calculations, you can work out the home you can afford to buy. Use the examples above as a guide to calculate your own GDS and TDS ratios.

Simply input your monthly payments and household income. Your GDS (gross debt service ratio) and TDS (total debt service ratio) will be dynamically calculated.

Monthly Mortgage Payment $
Property Taxes $
Heating Costs $
Condo Fees (if required) $
Total Payments
Gross Monthly Household Income $


Other Debts (Credit Cards, etc.) $