In short
Lenders use it to make sure you're not overextended.
For insured mortgages, the limit is generally 44%.
What counts in TDS
TDS takes everything in your GDS (mortgage payment at the qualifying rate, property tax, heating and half of any condo fees) and adds your other monthly debt payments. It is then divided by your gross monthly income.
Other debts include car loans and leases, student loans, personal loans, credit cards and lines of credit. For credit cards and unsecured lines, CMHC requires lenders to count a payment of at least 3% of the balance, even if your minimum payment is lower.
Secured lines of credit are counted using a payment calculated as if the balance were paid off over 25 years at the contract rate. Leases and fixed-term loans use their actual monthly payment.
What is the TDS limit in Canada?
For insured mortgages through CMHC, the maximum TDS is 44%. Lenders set their own limits for uninsured mortgages.
Because TDS is usually the tighter of the two tests, a modest car payment can reduce how much you can borrow more than you might expect.
Lenders also look at your credit history. CMHC has eased its ratio limits back to 39% and 44% for borrowers with a strong record of managing their payments.
Because every debt counts, TDS is often the ratio that decides your maximum price.
How to improve your TDS before you apply
Paying down revolving balances helps twice: smaller balances mean smaller counted payments. Paying off a small loan entirely removes its payment from the calculation.
Avoid new financing, such as a car or furniture, while you're house hunting. Talk to your lender before closing accounts, since that can affect your credit history.
Run the numbers early with a lender so you know which debts to pay down first. Sometimes clearing one small loan makes a bigger difference than chipping away at a large one.
If you co-sign a loan for someone else, that payment may count against you too. Mention it to your lender up front.
Common questions about total debt service ratio
What is the maximum TDS ratio in Canada?
For insured mortgages through CMHC, the maximum TDS is 44%. That includes housing costs plus all other debt payments, measured against gross income. Lenders can apply their own limits to uninsured mortgages. Housing costs are counted at the stress test rate.
What debts are included in TDS?
TDS includes your housing costs plus car loans and leases, student loans, personal loans, credit cards and lines of credit. Everyday bills like phone plans and groceries aren't included. Support payments may be counted, so disclose them to your lender.
How is credit card debt counted in TDS?
For insured mortgages, lenders count at least 3% of the outstanding balance as a monthly payment. That applies to unsecured lines of credit too. A $5,000 balance would count as $150 a month. Paying down the balance lowers the counted payment right away.
How can I lower my TDS ratio?
The fastest way is to pay down or pay off other debts before you apply. Increasing documented income or adding a co-borrower can also help. Avoid taking on new debt during the mortgage process. Run the math with your lender before deciding which debts to clear.
General information for Ontario, updated October 2026. Not legal, tax or mortgage advice. Rules change, so confirm with your lawyer, lender or the source above before you rely on it.