What is a Gross Debt Service GDS Ratio?

Gross Debt Service Ratio (GDS) Definition

To figure out the GDS Ratio you use the formula [PITH] + [C?] ÷ [Gross Salary]

  • (P) Principal - The portion of the mortgage payment that is used to lower the actual amount owing on the total loan amount.
  • (I) Interest - The portion of the mortgage payment that goes to the lender as a cost of borrowing the total loan amount.
  • (T) Taxes - Reflects the total amount paid in property taxes.
  • (H) Heat - As it is cold in Canada, typically Canadian lenders use $100 per month to represent the cost of utilities.
  • (C) Condo Fees - If your property is a condo, 50% of your condo fees are added to the [PITH] as they are considered a fixed cost.


When calculating GDS Ratios it is imperative that frequency of expenses and gross salary should be consistent (ie. monthly payments and monthly salary) for accurate calculations.

Your GDS Ratio is one of the most important factors when looking at how much of a mortgage loan a lender would be willing to offer you.

How GDS Ratio Impacts a Mortgage Application

Generally speaking as it applies to a mortgage qualification or preapproval.

Although the GDS Ratio is a relatively simple equation that compares the mortgage debt with how much income is generated per month, along with the TDS ratio, it is used to figure out just how much money the lender would be willing to lend.

When figuring out GDS ratio, the lower the number, the better. Lenders typically like to see a GDS Ratio of 32% or lower as this demonstrates a strong ability to make payments on the loaned amount. Said another way, a 32% GDS Ratio indicates that 32% of an applicant's gross income would go towards paying their mortgage payments [PITHC].

The higher the GDS Ratio, the more income is used to service the debt of the house, of course lenders are comfortable with a lower GDS Ratio because it means that the applicant has income beyond what is required to pay for the cost of operating the home.

Related Definitions


Related Links

If you are interested in figuring out your GDS Ratio, one of our mortgage brokers would love to work on a mortgage application with you today!

Last updated Oct 29, 2018