GDS Ratio (Gross Debt Service)
Ratio ABD (amortissement brut de la dette) in French
Quick definition
The GDS (gross debt service) ratio measures the share of your gross income that housing costs alone would consume: the stress-tested mortgage payment, property taxes, heat and half of any condo fees. For an insured mortgage, the standard maximum is 39% (as of July 2026).
One half of the debt service test
GDS is one of the two debt service ratios Canadian lenders use to size a mortgage. It asks a narrow question: could your income carry this specific home? Its sibling, the TDS ratio, starts from the same housing costs and adds every other debt you carry. A lender checks both, and your application must pass both.
The formula: add up the monthly mortgage payment, property taxes, heating costs and 50% of any condo fees, then divide by your gross monthly income. The catch is the payment itself. It is calculated at the qualifying rate, not your contract rate, so the payment inside the ratio is meaningfully higher than the one you will actually make.
What counts as a housing cost, and what does not
Only four items make it into the GDS numerator:
- The mortgage payment, computed at the qualifying rate.
- Property taxes, converted to a monthly amount.
- Heating costs.
- Half of the condo fees, if the property has any.
The heat line and the condo fee haircut
The heat line surprises people. Lenders do not ask for your utility bills; most plug in a standard estimate, commonly $100 to $175 per month or a formula based on the home's square footage (as of July 2026). You cannot argue it down with a copy of your gas bill, and it applies even to buyers of small, efficient condos.
Condo fees get the opposite treatment: only half of them count. The convention recognizes that fees bundle in costs a house owner pays out of pocket anyway, like maintenance and building insurance. Note what never appears at all: electricity beyond heating, home insurance, internet, and repairs. GDS is a qualification screen, not a true cost of owning.
The 39% cap in practice
For insured mortgages, GDS must stay at or below 39%. The arithmetic is friendly: take your gross annual income, divide by 12, multiply by 0.39, and you have the maximum monthly housing cost that passes. Everything the lender lets you borrow flows backward from that number, which is why property taxes and condo fees in your target neighbourhood directly shrink the mortgage you qualify for.
In Canada
In lender documents you will sometimes see GDS written as PITH: principal, interest, taxes and heat, the four insured-standard components. In Québec paperwork the same ratio appears as the ratio ABD (amortissement brut de la dette). The 39% cap is the insured standard; for uninsured mortgages, lenders set their own caps, which the debt service ratios entry covers in detail.
Worked example
Nadia and Marc earn $95,000 combined, or about $7,917 per month gross. At the 39% cap, housing costs of up to about $3,088 per month pass the GDS test. Their target house carries property taxes of $325 a month and a lender heat estimate of $125, leaving about $2,638 for the stress-tested mortgage payment. At a 6.5% qualifying rate over 25 years, roughly $670 per month carries each $100,000 of mortgage (as of July 2026), so that payment supports a mortgage of roughly $394,000. All figures are approximate.
If they chose a condo with $500 monthly fees instead, only $250 would count, but their passing mortgage would still drop to roughly $356,000. Same income, same cap, smaller loan.
Reviewed by Alexandre Bernier, CFP®, CIM®, PFP®·Updated July 2026