What's a good GDS/TDS ratio for a Canadian mortgage in 2026?
GDS under 32% and TDS under 40% means you're in strong shape — well clear of the OSFI limits. Here's what each ratio actually measures, how lenders use them, and how to calculate yours in two minutes.
The OSFI maximums are GDS 39% and TDS 44%. But passing the limit isn't the same as being in a strong position. A good GDS/TDS ratio — one that gets you approved easily, at the best rates, with room for life to change — is meaningfully lower than the ceiling.
Here's the full picture.
What GDS and TDS actually measure
GDS (Gross Debt Service) is the share of your gross monthly income that goes to housing costs alone:
GDS = (mortgage payment + property tax + heat + 50% of condo fees) ÷ gross monthly income
TDS (Total Debt Service) is the same calculation, but adds all your other monthly debt obligations on top:
TDS = (housing costs + car loans + student loans + credit card minimums + other debt) ÷ gross monthly income
The difference between the two numbers tells you how much non-housing debt you're carrying. A GDS of 35% and a TDS of 43% means 8% of your gross income is going to non-mortgage debt. That's a meaningful load — and it's visible to the lender.
The OSFI limits
Under OSFI's Guideline B-20, federally regulated financial institutions (the big banks, federally chartered trust and loan companies) apply these maximums when stress-testing your mortgage:
| Ratio | Maximum |
|---|---|
| GDS | 39% |
| TDS | 44% |
These apply at the qualifying rate — not your contract rate. The qualifying rate is max(contract rate + 2%, 5.25%). So even if your actual payment is comfortable, you're tested against a rate that's at minimum 5.25% and usually higher. Your GDS and TDS numbers at that rate are what lenders look at.
If you're above 39% GDS or 44% TDS at the qualifying rate, you fail the stress test, full stop.
What "good" looks like in practice
The OSFI caps are a ceiling, not a target. Here's a more useful framework:
| GDS | TDS | What it signals |
|---|---|---|
| < 32% | < 38% | Strong. Easy approval, maximum rate flexibility, buffer for income changes. |
| 32–36% | 38–42% | Solid. Most lenders approve without issue; some may look closely at TDS. |
| 36–39% | 42–44% | Marginal. Passes the stress test but there's little room for anything to go wrong. |
| > 39% | > 44% | Fails. Application declined or approval reduced until ratios come down. |
The "strong" zone isn't arbitrary. Prior to 2012, CMHC's default GDS limit was 32% — a number that reflected decades of actuarial data about when borrowers start running into trouble. OSFI raised it to 39% to align with market realities, but 32% is still the number that mortgage brokers point to as genuinely comfortable.
The TDS gap (38% vs. 44%) follows the same logic. A household at 43% TDS has very little margin — a job change, a rate increase at renewal, a car repair — any of these can tip the balance.
A worked example
Household gross income: $130,000/year → $10,833/month.
Monthly housing costs:
- Mortgage payment at qualifying rate (6.5%): $2,800
- Property tax: $450
- Heat: $150
GDS = ($2,800 + $450 + $150) ÷ $10,833 = 31.0% ← strong
Now add $650/month in car payments and $200/month in student loan minimums:
TDS = ($3,400 + $650 + $200) ÷ $10,833 = 39.3% ← solid
This household passes comfortably. Remove the car payment and TDS drops to 33.3%, with significant room for a larger purchase or a rate environment shift.
If you want to run your own numbers, the affordability + stress test calculator does the full GDS/TDS math at both the contract rate and qualifying rate simultaneously.
The GDS/TDS split matters
Lenders look at both ratios, but they look at the gap between them too. A GDS of 34% and TDS of 43% means you're carrying $900–$1,200/month of non-housing debt (on a $100–130K household income). Lenders see that as risk — not because you're over the limit, but because your non-housing obligations are large enough that a shock (job loss, rate hike, unexpected expense) could push your housing payments into stress quickly.
A cleaner profile — GDS 34%, TDS 37% — reads as a borrower who's using housing as their primary financial commitment, with manageable other obligations. That's a meaningfully different risk profile even though both pass.
What lowers your ratios
To lower GDS:
- Larger down payment (smaller mortgage → lower payment)
- Longer amortization (spreads the payment, though you pay more interest overall)
- Less expensive property
To lower TDS:
- Pay off revolving debt before applying — especially credit cards (lenders count the minimum, so a $0 balance eliminates that line entirely)
- Pay off car loans with fewer than 12 months remaining — many brokers can exclude these from TDS if you can document the payoff date
- Don't open new credit in the 6–12 months before applying
The order of operations matters. If your TDS problem is coming from a car loan, aggressively paying down a credit card instead won't move the needle as much as it should. Figure out which debt is doing the most damage to your TDS and target that first.
One timing note: stress test at renewal
The stress test rules at renewal have changed meaningfully over the past few years:
- Renewing with the same lender (same loan amount and amortization): you've never been stress-tested at renewal under B-20 — this exemption has been in place since the original 2017 guideline.
- Switching lenders at renewal (straight uninsured switch, same loan amount and amortization): as of November 21, 2024, this is also exempt from the OSFI qualifying rate stress test.
- Renewing with an increased loan amount or extended amortization: still stress-tested, regardless of lender.
The practical implication: if you're doing a straight renewal or straight switch and your numbers haven't changed, you won't be formally stress-tested. But if you're increasing the mortgage or refinancing, your GDS/TDS at the qualifying rate will be assessed again.
Summary
- GDS under 32%, TDS under 40%: you're in a strong position
- GDS 32–36%, TDS 38–42%: solid, most approvals are straightforward
- GDS 36–39%, TDS 42–44%: marginal — passes but no buffer
- Above the limits: application fails until you reduce the ratio
The OSFI caps (39%/44%) are a floor to qualify, not a target to aim for. Building in margin — especially on TDS — is what makes you resilient to rate changes, income disruptions, and whatever else comes up before your renewal.
Sources
Affordability + Stress Test
How much house you can afford under OSFI's mortgage stress test, GDS/TDS limits, and CMHC rules.
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