What is TDS (Total Debt Service Ratio) in Canadian mortgages?
All monthly debt payments divided by gross monthly income. Includes housing costs plus credit cards, car loans, lines of credit, and other debts.
Why TDS matters
TDS catches borrowers who look fine on housing cost but carry heavy consumer debt. Paying off or consolidating a car loan or credit card balance can move TDS more than any change to the mortgage itself.
How is TDS calculated?
(Housing Costs + All Other Debts) ÷ Gross Monthly Income
What is the TDS limit for Canadian mortgages?
≤ 44%
TDS example
Worked example
If total debts are $2,500/month and income is $6,000/month, TDS = 42%.
How brokers use TDS
- Use the minimum monthly payment for credit cards and lines of credit as reported on the credit bureau, since that is what lenders use.
- Include car loans and leases, student loans and support payments.
- A debt paid off before the application date drops out of TDS, so check what a client can clear with their funds or in a consolidation.
- If TDS is the limiting ratio, look at consolidating debt in the same deal or at a lender that allows higher ratios.
More questions about TDS
What is the TDS limit in Canada?
44% for insured mortgages and most A-lender files. B-lenders and some alternative products accept higher ratios.
Which debts count in TDS?
Housing costs plus credit cards, lines of credit, car loans and leases, student loans, support payments and similar regular obligations. Utilities other than heating, and phone bills, do not count.