GDS & TDS (debt-service ratios)
GDS and TDS are the two ratios lenders use to check how much of your income already goes to housing and total debt before they'll approve a mortgage.
Every lender wants to know one thing before handing you a mortgage: can you actually carry the payments? They answer it with two ratios. Gross Debt Service (GDS) is the share of your before-tax income that would go to housing alone: mortgage payment, property taxes, heating, and half of any condo fees. Lenders call these costs PITH (principal, interest, taxes, heating). Total Debt Service (TDS) takes that same housing number and adds every other debt payment: car loans, credit card minimums, lines of credit, student loans, support payments. Both are calculated on gross income, meaning your pay before tax and deductions come off, so the ratios look more generous than your real take-home budget.
For an insured mortgage (one where your down payment is under 20% and you pay for mortgage default insurance through CMHC, Sagen, or Canada Guaranty), the current maximums are 39% for GDS and 44% for TDS. So no more than 39% of gross income toward housing, and no more than 44% toward all debts combined. There's a catch that trips people up: your payment isn't tested at your actual contract rate. Federal rules require lenders to qualify you at the mortgage stress test rate, which is the higher of your contract rate plus 2% or 5.25%. Your ratios have to still fit under the limits at that inflated payment, not the rate you'll actually pay.
Uninsured mortgages (20% or more down) technically don't have the same hard-coded caps: individual lenders set their own tolerances, and a strong applicant can sometimes push past 44% TDS. But the stress test still applies to any federally regulated lender, so the extra room is smaller than it sounds. The numbers also aren't the whole story. A lender can approve you at 43% TDS and you can still be financially stretched, because gross income ignores tax, childcare, groceries, and everything else these formulas simply don't count.
Run your own math before you talk to anyone. Add up your expected housing costs, divide by your gross monthly income, and you have your GDS. Add your other debt payments and recalculate for TDS. If you're bumping against the ceilings, paying down a car loan or credit card balance often lifts your borrowing room more than scraping together a bit more down payment, because it directly shrinks the TDS side of the equation.