GDS and TDS are the two debt service ratios that Canadian lenders use to decide how much mortgage you qualify for. Gross Debt Service measures the share of your gross monthly income that goes to housing. Total Debt Service widens that figure to take in the rest of your monthly debt as well. For an insured mortgage, your GDS generally has to sit at or below 39 percent and your TDS at or below 44 percent.
The GDS calculation adds four things together: your mortgage principal and interest, property taxes, heating, and half of any condo maintenance fees. Divide that total by your gross income and you have your GDS ratio. A buyer earning $120,000 a year brings in $10,000 of gross monthly income, so a 39 percent ceiling leaves roughly $3,900 a month to cover all of those housing costs combined.
TDS begins with that same housing number and then layers in everything else you owe. Car payments count. So do credit card minimums, student loans, and lines of credit. This is the ratio that quietly trips up Toronto buyers who look affordable on paper, because a healthy income can still fail the TDS test once a car lease and a couple of balances eat into the room.
Here is the part most first-time buyers miss. Lenders do not run these ratios on the rate you are actually offered. They run them on the higher qualifying rate from the mortgage stress test, which is the greater of your contract rate plus two percent or a 5.25 percent floor. In 2026, with five-year fixed rates sitting in the low fours, that puts most applicants somewhere near six percent. Your ratios have to work at that stressed payment, not the real one.
The condo math matters in a city built on them. Because half of your monthly maintenance fee lands inside GDS, a unit with a high fee shrinks the mortgage you can carry even when the asking price looks reasonable. That alone is a good reason to read the condo maintenance fees before you fall for a floor plan.
Insured mortgages, the ones with less than 20 percent down, hold to those 39 and 44 percent limits and are only available on homes priced under $1.5 million. Conventional lenders set their own ceilings and sometimes go stricter. Working out your two ratios before you shop tells you the real spending number, which often differs from whatever a quick online calculator throws back.
Related reading: Mortgage Stress Test in Canada: How It Works, How Much Income Do You Need to Buy a Home in Toronto?, and How Much Down Payment Do You Need in Toronto?.