Understand GDS and TDS
GDS RATIO (Gross Debt Service Ratio):
The percentage of gross annual income required to cover payments associated with housing. Payments include mortgage principal, interest, property taxes and sometimes include secondary financing, heating, condominium fees or pad rent.
TDS RATIO (Total debt service ratio):
The percentage of gross annual income required to cover payments associated with housing and all other debts and obligations, such as car loans and credit cards.
Example – GDS – Gross Debt Service Ratio
| Monthly mortgage payment: (principal and interest)* |
$1,191.84 |
| Property taxes: (monthly) | $150.00 |
| Heating costs: (monthly) | $105.00 |
| Other:** | $50.00 |
| Total monthly payments: | $1,496.84 |
| Gross monthly household income: | $6,000.00 |
| GDS = Total monthly payments (x 100) Gross monthly income |
|
| GDS = $1,496.84 (x 100) = 24.95% $6,000.00 |
* Principal and interest must be based on the total insured loan amount, including CMHC insurance premium (if you choose to add the premium to your mortgage and not to pay the premium up front). Mortgage payment is based on a $200,000 mortgage, 5.25% interest rate, 25 year amortization.
** If you are purchasing a condominium, you must include 50% of the monthly condominium fee. If the mortgage is for a mobile home (chattel mortgage) include 100% of the monthly site (pad) rent.
Example – TDS – Total Debt Service Ratio
| Total monthly housing payments: (from GDS calculation):* |
$1,496.84 |
| Other debts: (personal loans, car loans, credit cards, etc.): |
$350.00 |
| Total monthly debts: | $1,846.84 |
| Gross monthly household income: | $6,000.00 |
| TDS = Total monthly payments (x 100) Gross monthly income |
|
| TDS = $1,846.84 (x 100) = 30.78% $6,000.00 |