How total debt service ratio works in Canada and why other debts matter in mortgage qualification.
Total debt service ratio, or TDS, measures how much of a borrower’s gross income goes toward housing costs plus other debt obligations.
TDS shows whether the borrower can handle the mortgage alongside existing obligations such as car loans, lines of credit, student debt, or credit-card payments. It is often the ratio that tightens the file when non-housing debt is already heavy.
TDS includes the same housing costs that feed into gross debt service ratio, then adds other recurring debt payments. The total is divided by gross income to produce a percentage.
Like GDS, the acceptable range depends on the lender, insurer, product, and overall file quality. It is not a promise that a borrower at the edge of the ratio will be comfortable in real life.
A borrower may have an acceptable housing-cost ratio but still fail TDS because of a large car payment and monthly line-of-credit obligation. In that case, the mortgage itself is not the only problem. The combined debt load is.
TDS is not only about the mortgage. It is about the mortgage plus other debts.
Borrowers also sometimes assume that if they can make the payment today, the lender should approve the file. Underwriting looks at the broader debt picture and often uses a higher qualifying payment under the stress test.
Debt treatment can vary by lender and file type, especially where revolving balances, co-signed debts, or business obligations are involved.