Lenders apply their own policies on top of these ratios, so the real figure may be lower or higher.
Estimates only. Your rate, payment and approval depend on the lender's review. No rate or approval is guaranteed.
The two ratios, in plain words
GDS, the gross debt service ratio, is the share of your before-tax income that would go to the home itself: the mortgage payment, property taxes, heat and half of any condo fees. For an insured mortgage the usual cap is 39%.
TDS, the total debt service ratio, adds your other monthly commitments on top, such as car payments, credit cards and student loans. For an insured mortgage the usual cap is 44%.
Whichever ratio you hit first sets the limit. With few other debts it is usually GDS; with a car loan and a card or two it is often TDS, which is why paying a small debt off before you apply can raise what you qualify for.
Why the stress test matters
Federally regulated lenders do not check the ratios at the rate you will actually pay. They use a qualifying rate: the higher of your contract rate plus 2% and 5.25%. The calculator does the same, so the mortgage amount it shows is the one that passes at the qualifying rate, while the payment row shows what that mortgage would cost at the example rate.
The gap between the two is the cushion the rules build in for rates rising before your first renewal.
Why the real number is the lender's
Lenders differ on which income they count and how much of it: overtime, bonuses, a second job, rental income and self-employed income are all treated differently from one lender to the next. Some count condo fees in full. Some, beyond the big banks, work to different ratio limits for people whose income or credit does not fit a bank's template.
Your credit history, the property and the source of your down payment all come into it too. Treat the figure above as a planning number. A pre-approval, with your documents in a lender's hands, is the real one.