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Debt Service Ratio Calculator

Calculate your Gross Debt Service (GDS) and Total Debt Service (TDS) with our Debt Service Calculator.

By Patrick Ross · Reviewed By Jacob Norris · Last Updated June 12, 2024

What are debt service ratios?

Debt service ratios compare your gross household income to your monthly debt payments and housing expenses. These ratios are particularly useful to mortgage lenders as they use debt service ratios to ensure your mortgage is affordable. The two primary ratios used are Gross Debt Service (GDS) and Total Debt Service (TDS).

The Gross Debt Service (GDS) Ratio

The Gross Debt Service (GDS) Ratio is a measure of your total housing costs as a percentage of your gross annual income. Housing costs include principal, interest, CMHC insurance, taxes and heat.

Gross Debt Service Formula:

  • Gross Debt Service (GDS) Ratio = [ Housing Costs / Gross Annual Income ]

Example: Let's calculate the gross debt service ratio based on the following facts: mortgage payment: $3000 / month, property taxes: $3600 or ($300 / month), Heating Costs: $150 / month, Income: $120,000 or ($10,000 / month).

  • [ $3,000 mortgage payment

    + $300 property tax

    + $150 heating costs ]

    / $10,000 monthly income

    = 34.50% Gross Debt Service (GDS) Ratio

The Total Debt Service (TDS) Ratio

The Total Debt Service (TDS) Ratio is a mesaure of your total housing costs in addition to other monthly debt payments as a percentage of your gross income. In addition to the housing costs broken down above, other debt obligations such as credit cards, lines of credit, personal loans, car loans etc. should be factored into the calculation.

Total Debt Service Formula:

  • Total Debt Service (TDS) Ratio = [ ( Housing Costs + Debt Payments ) / Gross Annual Income ]

Example: Let's calculate the gross debt service ratio based on the following facts: mortgage payment: $2500 / month, property taxes: $2400 or ($200 / month), Heating Costs: $125 / month, Income: $108,000 or ($9,000 / month), car loan: $350 / month, credit card debt: $250 / month.

  • [ $2,500 mortgage payment

    + $200 property tax

    + $125 heating costs

    + $350 car loan

    + $250 credit card debt ]

    / $9,000 monthly income

    = 38.05% Total Debt Service (TDS) Ratio

What is the maximum debt service ratio?

The Canadian Housing and Mortgage Corporation (CMHC) places a restriction on debt service ratios for default-insured mortgages. The maximum ratio is 39% on the Gross Debt Service (GDS) ratio and 44% on the Total Debt Service (TDS) ratio.

What is considered a good GDS/TDS debt service ratio?

We can use the 28/36 rule as a good guide to how much debt an individual or household should take on. This rule states that a household should spend a maximum of 28% of its gross monthly income on houses expenses. The maximum amount spent on total debt including both housing and other loans should not exceed 36% of gross monthly income.