Qualification
GDS / TDS Ratio
Two debt-service ratios lenders use to qualify you. GDS = housing costs ÷ income; TDS = housing + all other debts ÷ income.
Gross Debt Service (GDS) ratio adds up your monthly housing costs — mortgage payment, property tax, heating, and 50% of condo fees if applicable — and divides by your gross monthly income. CMHC guidelines cap GDS at 39%.
Total Debt Service (TDS) does the same calculation but adds in every other monthly debt obligation: car loan, credit-card minimum payment, student loan, lines of credit, child support. CMHC caps TDS at 44%.
The stress test runs both ratios at the qualifying rate (contract rate plus 2% or the federal benchmark, whichever is higher), not the actual contract rate. Your real GDS/TDS at the contract rate is usually lower — that's the cushion.
If GDS or TDS exceeds the caps, A Lenders decline. B Lenders are more flexible; some go up to 44%/50% with offsetting strengths (large down payment, high net worth, stable employment).
Source: CMHC — Mortgage qualification