Step 2: Calculate Your Gross Debt Service Ratio (GDS)
The GDS represents the percentage of your gross income allocated to housing costs.
These costs include your monthly mortgage payment, property taxes, heating expenses, and 50% of your condo fees if applicable.
According to the Canada Mortgage and Housing Corporation (CMHC), your GDS should not exceed 35% of your gross income.
To calculate your GDS, use the following formula:
GDS = (PIT + heating + property taxes + 50% of condo fees) / gross income
Here, PIT stands for Principal, Interest, and Taxes, which are the three components of your monthly mortgage payment.