What are GDS and TDS ratios in Canadian mortgages?

Gross Debt Service (GDS) is the percentage of your gross household income needed to pay housing costs (principal, interest, property taxes, heat, and 50% of condo fees), capped at 39%. Total Debt Service (TDS) adds other monthly debt obligations (car loans, credit cards, student loans) and is capped at 44%.

How does the OSFI mortgage stress test affect how much I can borrow?

Under OSFI Guideline B-20, lenders must test your income using the qualifying rate: your contract mortgage rate + 2.00% or 5.25%, whichever is higher. This lowers the maximum loan amount you can qualify for by approximately 15% to 20% compared to testing at your actual contract rate.

What is the difference between maximum budget and comfortable budget?

The maximum price is the absolute legal ceiling a bank will lend based on 39% GDS / 44% TDS limits. A comfortable budget (typically 80% to 85% of your maximum) leaves a financial buffer for emergencies, investments, lifestyle, and unexpected home repairs so you avoid becoming 'house poor'.

OSFI B-20 Banking Standard (39% GDS / 44% TDS)

Canada Home Affordability Calculator

Find out the exact maximum purchase price and mortgage you qualify for under Canadian federal debt-service ratios and qualifying stress-test interest rates.

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💼 Income & Down Payment Capital

Bank Qualifying Ratios

Primary Annual Income ($ CAD)

Co-Borrower Income ($ CAD)

Available Down Payment Cash ($ CAD) $100,000

FHSA, RRSP Home Buyers' Plan (HBP), and personal savings.

Contract Mortgage Rate (%)

Stress-test rate: 6.79%

Amortization Period

Monthly Housing & Non-Mortgage Debt GDS / TDS Drivers

Annual Property Taxes ($)

Monthly Heating Costs ($)

Monthly Condo Fees ($)

50% factored into GDS/TDS

Other Monthly Debts ($)

Car loans, cards, student loans

Maximum Qualified Home Price TDS (44%) Bounded

$842,500

Max Mortgage Loan: $742,500

Actual Monthly Payment $4,228 / mo

Stress Test Qualifying Payment $5,108 / mo

🛡️ Recommended Comfortable Budget (85%) $716,000

Purchasing at 85% of your bank limit leaves an extra $634 / month in free cash flow to buffer against future interest rate renewals and home repairs.

Debt-Service Ratio Analysis OSFI B-20 Limits

Gross Debt Service (GDS): 36.2% (Max 39.0%)

Total Debt Service (TDS): 44.0% (Max 44.0%)

Gross Monthly Income: $15,000

Max Allowed Monthly Housing: $5,850

Less: Property Taxes & Heat: -$550

Less: Non-Mortgage Debt: -$650

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How Canadian Mortgage Affordability is Calculated

In Canada, mortgage qualification is strictly governed by the Office of the Superintendent of Financial Institutions (OSFI) under Guideline B-20. Lenders do not lend based on your contract rate; they evaluate your income against two debt ratios and a qualifying stress test.

1. The OSFI Stress Test Qualifying Rate

Regardless of whether you secure a 4.5% fixed rate, federal regulations mandate that your application is tested at the Qualifying Rate:

\[ \text{Qualifying Rate} = \max(\text{Contract Rate} + 2.00\%, 5.25\%) \]

2. GDS (39%) vs. TDS (44%) Limits

Gross Debt Service (GDS max 39%): Total monthly shelter costs (mortgage P&I + property taxes + heating + 50% condo fees) must not exceed 39% of gross monthly income.
Total Debt Service (TDS max 44%): Shelter costs plus all outside monthly debts (car loans, credit cards, student loans) must not exceed 44% of gross monthly income.

Frequently Asked Questions (Home Affordability)

How can I increase my maximum approved mortgage? ▼

The fastest ways to increase borrowing capacity are: 1) Pay off outside consumer debt (every $100/month reduction in car or credit card debt can increase your mortgage approval by ~$20,000); 2) Add a co-borrower/guarantor; 3) Increase your down payment using FHSA or RRSP Home Buyers' Plan funds.

What is the new $1.5 million insured mortgage cap? ▼

Effective late 2024 / 2025, the Canadian federal government expanded the maximum price for CMHC-insured mortgages from $1,000,000 to $1,500,000. Buyers can now purchase homes up to $1.5M with less than 20% down (5% on first $500k + 10% on remainder).

FreeCalcSuite • Official Canadian Home Affordability Assessment