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The Gross Debt Service (GDS) ratio is the percentage of a borrower’s gross annual income needed to cover housing costs — mortgage principal and interest, property taxes, heat, and 50% of any condo fees. For insured mortgages in Canada, lenders generally require a GDS of 39% or less, calculated at the qualifying rate.
GDS answers one question for a lender: can this borrower carry the home itself? It isolates shelter costs from every other debt. The formula adds the four housing costs Canadian lenders count — often shortened to PITH (Principal, Interest, Taxes, Heat) — and divides them by gross income.
A lower GDS signals more room in the budget for the home; a higher GDS means shelter costs are consuming a large share of income before any other obligations are counted. GDS is always read alongside its sibling, the Total Debt Service (TDS) ratio, which layers in car payments, credit cards, and other debts.
GDS = ( P&I + Property taxes + Heat + 50% of condo fees ) ÷ Gross monthly income
Insured mortgages: CMHC, Sagen, and Canada Guaranty apply a maximum GDS of 39% (and TDS of 44%) for default-insured files.
Stress-tested, always: GDS is calculated at the minimum qualifying rate — the greater of the contract rate + 2% or 5.25% — not the contract rate, under OSFI Guideline B-20 and federal insured-mortgage rules.
Conventional files vary: uninsured lenders set their own internal GDS/TDS limits under B-20; some alternative and private lenders trade higher ratios for rate or equity.
Who works with it daily: mortgage agents (Ontario, FSRA), submortgage brokers (BC, BCFSA), mortgage associates (Alberta, RECA), and courtiers hypothécaires (Quebec, AMF) all pre-qualify clients against GDS before submitting to lenders.
A household earning $110,000 gross per year ($9,167/month) applies for an insured mortgage on a condo:
$3,191 ÷ $9,167 = 34.8%. The same file must also pass TDS at 44% once other debts are added.
Definitions reflect Canadian federal and provincial rules as of the “Updated” date above. Not advice for any specific file.
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