How gross debt service ratio works in Canada and what housing costs it measures in mortgage qualification.
Gross debt service ratio, or GDS, measures how much of a borrower’s gross income goes toward housing costs. It is one of the key affordability tests in Canadian mortgage underwriting.
GDS helps lenders decide whether the housing cost is reasonable relative to income. A borrower can have a strong credit profile and still fail the file if the projected housing cost is too large for the income shown.
GDS usually looks at the qualifying mortgage payment plus key housing expenses such as property taxes, heating, and in some cases part of condo fees. The result is expressed as a percentage of gross household income.
The exact threshold depends on the lender, insurer, product type, and overall file strength. That is why GDS is best understood as a ratio framework, not as one universal pass-fail number.
A lender adds together the qualifying mortgage payment, property taxes, heating costs, and part of the monthly condo fee. If those costs consume too much of gross income, the GDS result may be too high for approval.
GDS is not the same as total debt service ratio. TDS adds other debt obligations beyond housing costs.
Borrowers also sometimes think GDS uses only the real contract payment. In a stress-test context, the lender may use a higher qualifying payment instead.
How income is counted and which expenses are included can vary by lender, insurer, and file type. Self-employed and variable-income files often need extra underwriting judgment.