Debt Options Guide
Debt-to-Income Ratio in Canada
Updated
Debt-to-income ratio is your total monthly debt payments divided by your gross monthly income. Canadian mortgage lenders use two versions: Gross Debt Service (housing costs only) and Total Debt Service (housing plus all other debts). For insured mortgages, CMHC's limits are 39% GDS and 44% TDS.
Worked example
Gross income of $6,000 a month. Housing costs of $1,900 and other debt payments of $700. GDS = 1,900 ÷ 6,000 = 31.7%. TDS = 2,600 ÷ 6,000 = 43.3% — just inside the 44% limit.
How to lower your ratio
- Pay down revolving balances — card minimums count against you
- Avoid new car loans or financing before applying for a mortgage
- Consolidate high-payment debts into a lower monthly payment
- Add a co-applicant's income where appropriate
When the ratio signals a problem
If more than about 40% of your gross income goes to non-mortgage debt, or you're borrowing to make minimum payments, talk to a non-profit credit counsellor or a Licensed Insolvency Trustee — first consultations are free.
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Related guides
- Debt Consolidation Loans in CanadaWhen a debt consolidation loan makes sense in Canada, how it compares with a debt management plan or consumer proposal, and the risks of using home equity.
- How to Pay Off Credit Card Debt in CanadaPractical ways to pay off credit card debt in Canada: snowball vs avalanche, balance transfers, consolidation, credit counselling and when to consider a consumer proposal.
- How to Improve Your Credit Score in CanadaWhat counts as a good credit score in Canada, what moves it, and the practical steps that raise it — from payment history to credit utilization.
Sources
DebtDefender is an independent information site, not a Licensed Insolvency Trustee or law firm. This guide is general information, not advice for your situation. See our disclaimer.