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Mortgage Affordability - Debt Service Ratio

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Mortgage Affordability - Debt Service Ratio


Those two ratios will define your affordability when applying for a mortgage:


  • GDS (Gross Debt Service) is the monthly household income percentage covering your housing costs. It must not exceed 39%. 
  • TDS (Total Debt Service) is the percentage of your monthly household income covering your housing costs and other debts. It must not exceed 44%
 
  
GDS = (Total of Mortgage payment or rent, Property taxes, Heating Expenses, 50% of condo fees)                       divided by your gross income. 
 
 
TDS = [(Total of GDS, Loan payments, Credit card payments (3% of the outstanding balance), Line of                   credit payments (interest charges)]divided by your gross income.
 
 
Gross income is your income before deductions. If you are married you should use your combined income and debt balances.
 
If you have a high credit score or some valuable assets, you may still qualify for a mortgage, even if your GDS and TDS are slightly higher than the industry standards. 
 
 
 
https://www.cmhc-schl.gc.ca/en/consumers/home-buying/calculators/debt-service-calculator

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