What is the GDS ratio and what is the maximum?

The Gross Debt Service (GDS) ratio measures your housing costs as a percentage of your gross income. It includes your mortgage payment (at the stress test rate), property taxes, heating costs, and 50% of condo fees. The maximum GDS ratio allowed by Canadian lenders is 39%. If your GDS is 39%, your housing costs are consuming 39 cents of every dollar of gross income.

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

The Canadian mortgage stress test requires lenders to qualify you at the higher of: your actual rate + 2%, or 5.25%. So if you are getting a 4.89% rate, you are qualified at 6.89%. This typically reduces the maximum mortgage you qualify for by 15–20% compared to qualifying at the actual rate. The stress test was designed to ensure borrowers can handle rate increases at renewal.

Does rental income count toward my mortgage qualification?

Yes, with conditions. For owner-occupied rental properties (e.g., a basement suite), most lenders add 50–80% of the rental income to your qualifying income. For investment properties, rules vary — some lenders use 80% of gross rental income, others use a rental offset method. Rental income must typically be documented with a current lease agreement.

Can a co-signer help me qualify for more?

Yes — a co-borrower adds their full income to the qualification calculation, which directly increases your maximum GDS/TDS limits. A co-signer (as opposed to co-borrower) typically only provides a credit guarantee without adding their income. Co-borrowers are more commonly used and more effective. Both borrowers are equally responsible for the mortgage.

What is the maximum mortgage for a $120,000 household income?

With $120,000 annual income, 10% down payment ($50,000 on $500K), $150/month heating, and no other debts, you typically qualify for approximately $450,000–$500,000 in mortgage using the stress test. At 20% down with the same income and no debts, this can increase to $530,000–$560,000. The exact number depends on your rate, debts, property tax estimate, and lender-specific guidelines.

How do car loan payments affect my mortgage qualification?

Car loans count toward your TDS ratio, which has a 44% maximum. A $500/month car payment reduces the amount available for housing debt. On a $100,000 income (roughly $8,333/month), a $500/month car payment uses 6% of your TDS room, leaving only 38% for housing — which may reduce your maximum mortgage by $50,000–$80,000 depending on your rate and amortization.

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Mortgage Affordability Calculator Canada

Find out exactly how much mortgage you can qualify for using the Canadian stress test, GDS and TDS ratios. Enter your income, debts, and down payment for a real qualification estimate.

Stress-testing at 6.89% (current qualifying rate)

Your Financial Details

Income

Annual Income

Monthly Debt Payments

Car Payment ($/mo)

Credit Card Minimum ($/mo)

Student Loan ($/mo)

Other Debt ($/mo)

Down Payment & Housing Costs

Down Payment Saved

Monthly Heating ($/mo)

Monthly Condo Fees ($/mo)

Mortgage Terms

Interest Rate (%)

Amortization

You May Qualify For

$393,000

Maximum mortgage (stress-tested)

Maximum Home Price

$443,000

with $50,000 down payment

Qualification Ratios

GDS Ratio38.9% / 39% max

TDS Ratio38.9% / 44% max

Stress Test Rate

Max of (4.89% + 2%) or 5.25%

6.89%

Limiting Factor: GDS Ratio

Your housing costs alone (mortgage + tax + heating + condo fees) are the binding constraint. Reducing these costs or increasing your down payment will help most.

Estimated Monthly Payment

(at 4.89% actual rate, not stress test)

$2,261/mo

Income Required for Common Home Prices

Based on $50,000 down payment, 4.89% rate (6.89% stress test), 25-year amortization, $150/mo heating. Other debts of $0/mo included.

Home Price	Min. Annual Income	Monthly Payment
$400,000	$90,000	$2,014/mo
$500,000	$114,000	$2,589/mo
$600,000	$138,000	$3,164/mo
$700,000	$162,000	$3,740/mo
$800,000	$186,000	$4,315/mo
$1,000,000	$234,000	$5,466/mo

Green rows = within your current income qualification.

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Understanding GDS and TDS Ratios

Canadian lenders use two debt ratios to determine how much you can borrow. Both are calculated using the stress test rate, not your actual mortgage rate.

GDS — Gross Debt Service

Maximum: 39% of gross monthly income

GDS = (mortgage payment

+ property tax

+ heating

+ 50% condo fees)

÷ gross monthly income

Only counts housing costs — no other debts.

TDS — Total Debt Service

Maximum: 44% of gross monthly income

TDS = (GDS components

+ car payments

+ credit card minimums

+ student loans

+ other debt)

÷ gross monthly income

All debt payments combined. Binding when you carry other debts.

How the Stress Test Affects Your Affordability

Introduced in January 2018, the Canadian mortgage stress test requires all borrowers — even those with 20%+ down payment — to qualify at a higher rate than their actual mortgage rate. The qualifying rate is the greater of:

→Your contract rate + 2.0% — e.g., if you get 4.89%, you qualify at 6.89%
→5.25% minimum floor — applies when rates are very low

The stress test reduces your borrowing power by approximately 15–20%. A borrower who qualifies for $600,000 at their actual rate typically qualifies for only $500,000–$510,000 after the stress test is applied.

The purpose is to ensure you can still afford payments if rates rise at renewal. At current rate levels, the +2% buffer means your payment would need to be affordable if rates increased significantly from today. Read our full stress test guide for everything you need to know.

5 Ways to Increase Your Mortgage Qualification

Document all income sources

Include employment income, self-employment income (2-year average), rental income (typically 50–80% credited), bonuses (2-year average), and investment income. Each additional documented income dollar increases your qualifying mortgage by roughly $4–5.

Pay down non-mortgage debt

Every $100/month reduction in debt payments (car loan, credit card minimums) can increase your maximum mortgage by $15,000–$20,000. If you are close to qualifying, eliminating a car payment before applying can make a significant difference.

Increase your down payment

A larger down payment directly increases the home price you can reach, and going above 20% removes the CMHC insurance premium (2.8–4.0% of mortgage) from your calculation. Every $10,000 extra in down payment adds roughly $10,000 to your maximum home price.

Add a co-borrower

A co-borrower — typically a spouse, partner, or family member — adds their full qualifying income to your application. Both incomes are combined to calculate GDS/TDS ratios. This is the single biggest lever for increasing qualification, often doubling the maximum mortgage.

Choose the right property type

Condos include monthly condo fees in your GDS calculation, which can reduce your mortgage qualification. A freehold home with the same purchase price allows more of your qualifying income to go to mortgage payments. If you are borderline qualifying, comparing condo vs freehold at the same price can reveal thousands in qualification difference.

Frequently Asked Questions

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