Total Debt Service (TDS) Ratio
Quick Definition
All monthly debt payments as a percentage of gross income — max 44%.
Full Explanation
The Total Debt Service ratio measures all your debt obligations — housing costs (GDS) plus all other monthly debt payments (car loans, student loans, credit card minimum payments, lines of credit) — as a percentage of gross income. CMHC requires a TDS ratio of 44% or less for insured mortgages. If your gross income is $8,000/month, your total allowable debt payments would be $3,520/month. Lenders use TDS to ensure borrowers are not overextended across all their debts.
Related Terms
Gross Debt Service (GDS) Ratio
Housing costs as a percentage of gross income — max 39% for CMHC-insured mortgages.
Debt-to-Income Ratio (DTI)
The percentage of your gross income that goes toward debt payments.
CMHC (Canada Mortgage and Housing Corporation)
Federal Crown corporation that provides mortgage default insurance for high-ratio mortgages.
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