GDS and TDS explained
GDS is your housing costs (mortgage payment, property tax, heat, half of condo fees) divided by your gross monthly income. The 39% cap means housing can't eat more than 39% of every dollar you earn before tax.
TDS adds your other debts on top — car loans, student loans, credit card minimum payments, lines of credit. The 44% cap means your total debt obligations including housing can't exceed 44% of gross income.
Most borrowers hit the GDS limit first when they have minimal other debt. Borrowers with car payments or student loans often hit TDS first. The lender uses whichever ratio is more restrictive.
The stress test (federal qualifying rate)
Since 2018, all federally-regulated lenders apply a stress test to mortgage applicants. Your affordability is calculated at a rate higher than your actual contract rate — specifically, the higher of contract+2% or the Bank of Canada benchmark (currently 5.25%).
This is meant to ensure you can still afford payments if rates rise. In practical terms: it shaves 15-20% off your maximum affordable mortgage compared to qualifying at the contract rate alone.
Provincially-regulated lenders (mostly credit unions) can choose whether or not to apply the stress test. Working with a broker means we can route your application to a lender who fits your file.
Why this number isn't a pre-approval
This calculator gives you a directional estimate, not a commitment. A real pre-approval requires a credit pull, employment verification, and underwriter review.
The estimate also assumes you have no other complicating factors: standard employment income, no recent credit issues, the down payment fully saved (not borrowed), and a property that will appraise at the purchase price.
When you're ready to buy, get a real pre-approval. It's free, takes 24-48 hours, and gives you a rate hold for up to 120 days.