Qualifying
Gross debt service ratio (GDS)
Your housing costs as a share of your gross income (mortgage payment, property taxes, heat and half the condo fee). The insured guideline is 39%.
Also called GDS.
GDS measures whether the house on its own is affordable. The top of the ratio is the qualifying mortgage payment, property taxes, heating costs and 50% of any condo fee. The bottom is gross household income before tax.
The insured guideline is 39%. Lenders can go above it on a strong file, meaning a solid down payment, high credit, long job tenure and provable income. That flexibility shrinks quickly as the number rises.
The mortgage payment in the ratio is calculated at the qualifying rate, not your contract rate. That's why the stress test makes such a difference to what you can borrow.
In Edmonton, property tax takes up a noticeable share. At roughly 1.0% of assessed value all-in, a $470,000 home carries about $390 a month inside GDS before any mortgage payment is counted.
Related terms
Total debt service ratio (TDS)
All your monthly debt payments as a share of gross income, including housing. The insured guideline is 44%.
Stress test
The rule that lenders qualify you at about 2 percentage points above your contract rate, to confirm you could still carry the mortgage.
Qualifying rate
The rate lenders test you at: the greater of your contract rate plus 2 percentage points, or 5.25%.
This definition describes how the term is used in Canadian residential mortgage lending. It’s general information, not advice on your file. Rules, thresholds and rates change. Where a figure is quoted, it’s current as of the date shown on the related guide.
Sharp rates. The full picture.
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