The Two Ratios Lenders Use
Every Canadian lender uses two ratios to determine your maximum mortgage. Understanding them is the foundation of everything else.
GDS — Gross Debt Service
Formula
Housing costs ÷ Gross monthly income
Lender cap
≤ 32–39% (varies by lender and credit score)
Includes
Mortgage payment, property taxes, heat, 50% of condo fees
TDS — Total Debt Service
Formula
(Housing costs + all debts) ÷ Gross monthly income
Lender cap
≤ 44%
Includes
Everything in GDS + car loans, lines of credit, credit card minimums
The Stress Test — What Rate You Actually Qualify At
Even if you're offered a rate of 4.5%, you must qualify at the higher of: your rate + 2% (6.5%), or 5.25%. So you're tested at 6.5%. This reduces your maximum qualifying amount by approximately 15–20% compared to qualifying at your actual rate.
The stress test isn't your payment rate.
You still pay your contracted rate (e.g., 4.5%). The stress test is purely a qualification hurdle — it ensures you could still afford the mortgage if rates rose significantly at renewal.
Real Alberta Income Examples — 2026
Based on stress test at current qualifying rates, no other debts, and property taxes of ~$4,500/year. These are estimates — your actual qualification depends on credit score, debts, and lender.
| Household Income | Down Payment | Est. Max Purchase | Est. Monthly Payment |
|---|---|---|---|
| $80,000 | $40,000 | ~$380,000 | ~$1,950/mo |
| $100,000 | $50,000 | ~$480,000 | ~$2,450/mo |
| $120,000 | $60,000 | ~$575,000 | ~$2,950/mo |
| $150,000 | $75,000 | ~$720,000 | ~$3,700/mo |
| $200,000 | $100,000 | ~$960,000 | ~$4,900/mo |
*Estimates based on 4.8% qualifying rate, 25-year amortization. Actual results vary.
Affordable vs. What You Qualify For
What you qualify for and what you should borrow are often different numbers. Lenders calculate the maximum — they don't calculate what leaves you with financial breathing room. A broker helps you think through the real-world monthly budget, not just the maximum the lender will approve.
- Max qualification is based on gross income — your take-home is significantly less
- Utilities, maintenance, and insurance add $500–$1,500/month on top of your mortgage
- Property taxes in Calgary average $3,000–$6,000/year depending on property value
- Leaving 10–15% below your maximum gives financial flexibility for life changes