Use the Stress Test tool to calculate the maximum loan you can afford to borrow.
The app will calculate the maximum loan based on industry standard debt service ratios, your current monthly debt payments like credit cards or car payment, your income and of course your credit score.
About Debt Service Ratios (GDS / TDS)
Most lenders only lend you a maximum amount of mortgage so that your monthly home ownership costs can fall between 32% and 39% of your family income (if your partner is a co-applicant). This special percentage is called Gross Debt Service (GDS). The better your score is, the higher the percentage and the more of a loan a lender is willing to trust you with.
There is also another special percentage called Total Debt Service (TDS), which just like the name implies, looks at all your debt payment, such as credit card and car payments.
Luckily, the Canadian mortgage app does all the super accurate number crunching for you.
Here is a bit more details on GDS/TDS
- GDS (gross debt service) is the percentage of your salary that can be used towards all home ownership expenses, including mortgage, heat, utilities, property tax. With an excellent credit score you can go up to 39% of your annual income.
- TDS (total debt service) is the percentage of your salary that can be used towards all home ownership expenses plus any other monthly debt commitments you may have, such as car payment and credit cards. This can go up to 44%.