When you apply for a mortgage through a Canadian lender, one of the primary metrics used to evaluate your application is your Total Debt Service ratio (TDS). Understanding what it measures and what lenders look for can help you enter the process with a clearer picture of where you stand.
What TDS Measures
TDS looks at what percentage of your gross monthly income goes toward all of your debt obligations combined. This includes your new mortgage payment, property taxes, heating costs, and any existing debts you carry such as credit cards, car loans, lines of credit, and so on.
What a Strong TDS Looks Like
Canadian lenders generally look for a TDS ratio between 40% and 45%, though this can vary depending on the lender and the borrower's overall profile. The lower your ratio, the more comfortably you can carry new debt, and the more favorably a lender is likely to view your application.
What This Means for You
As a SoBankable borrower, your TDS will be one of the primary metrics we use to evaluate your application. Understanding where you stand before you apply gives you a clearer picture of what you qualify for, and a stronger foundation going into the process.
