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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, or condominium fees.

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.

What percentage does the lender consider too high?

GDS Ratio - Most lenders recommend that you spend no more than 27 to 32 per cent of your gross (before tax) monthly income on combined housing costs. There are some lenders that do not use this ratio.

TDS Ratio - According to most lenders, you should use no more than 37 to 40 per cent of your gross monthly income to service your mortgage and cover other debts and obligations. We have some lenders that will go to 50 per cent.

Some lenders have been known to be more flexible on the ratios if your credit rating is excellent and you have other products with them (investments, RRSPs, RESPs, insurnace, etc.)

Tips to help you achieve these standards:

Before applying, pay off some loans, especially the ones with higher monthly payments

Increase your amortization on the loan to decrease your monthly payments (watch for penalties)

Increase the size of your down payment

Lower your interest rate, consider a different type of loan to lower your payments

Re-think your target house price, consider the same house in a different neighbourhood.

Calculate Your Mortgage Pmt

Mortgage Amt:

Interest Rate:

Amortization:

639.81

*Rates and points are subject to change without notice and are dependant on the borrower’s current credit situation. Discounted rates are on approved credit and subject to lenders’ discretion.
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