Debt-to-Income Ratio (DTI)
Quick Definition
The percentage of your gross income that goes toward debt payments.
Full Explanation
Your debt-to-income ratio compares your total monthly debt obligations to your gross monthly income. It is calculated by dividing total monthly debt payments by gross monthly income and multiplying by 100. In Canada, mortgage lenders look at two specific DTI ratios: the Gross Debt Service (GDS) ratio (housing costs ÷ income, max 39%) and the Total Debt Service (TDS) ratio (all debts ÷ income, max 44%). A lower DTI indicates better financial health and improves your chances of loan approval.
Related Terms
Gross Debt Service (GDS) Ratio
Housing costs as a percentage of gross income — max 39% for CMHC-insured mortgages.
Total Debt Service (TDS) Ratio
All monthly debt payments as a percentage of gross income — max 44%.
Credit Score
A 3-digit number (300–900) indicating your creditworthiness to lenders.
Amortization
The total length of time to pay off a loan through scheduled payments.
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