Question 1

What is the GDS ratio and how does it affect my mortgage?

Accepted Answer

The Gross Debt Service (GDS) ratio measures your total monthly housing costs (mortgage, property tax, heating, and condo fees) as a percentage of your gross monthly income. Canadian lenders require GDS to be 32% or below for mortgage qualification.

Question 2

What is the TDS ratio?

Accepted Answer

The Total Debt Service (TDS) ratio adds all other monthly debt payments (car loans, credit cards, student loans) to your housing costs and divides by gross income. Lenders require TDS to be 44% or below. If your debt payments are high, TDS becomes the binding constraint rather than GDS.

Question 3

How does the stress test reduce my maximum purchase price?

Accepted Answer

The federal stress test requires you to qualify at the higher of your contract rate + 2% or 5.25%. At a lower qualifying rate you could afford more, but the stress test reduces your maximum loan by roughly 15%–25% compared to qualifying at your actual rate.

Question 4

Is the stress test applied to all mortgages in Canada?

Accepted Answer

Yes — the stress test applies to all federally regulated lenders (banks, credit unions regulated federally) regardless of your down payment size. Some provincially regulated lenders may have different rules.

Buyer Budget Framework

How This Is Calculated

Buyer Budget Framework

How This Is Calculated