Debt Service Calculator

Use our Debt Service Calculator to calculate how much mortgage you can afford. Enter your mortgage amount, income, monthly debts, and home expenses to get your GDS and TDS ratios instantly. These ratios help you see if you meet lender requirements and understand your financial readiness. The calculator also includes stress test features to show how different interest rates and loan terms affect your eligibility.

Debt Service Calculator

How to Use the Debt Service Calculator

Using Dove Mortgages’ Debt Service Calculator is simple and fast. Follow these steps to get an accurate assessment of your mortgage affordability:

1 Mortgage Amount

Start by entering the total mortgage amount you’re considering. You can either type in the number or use the slider to adjust the amount.

2 Gross Annual Income

Add your gross annual income before taxes. This is one of the most important factors lenders use to calculate your GDS/TDS ratios, which lenders use to determine your ability to afford mortgage payments.

3 Set The Down Payment

Input any fixed monthly debts you currently have, such as car loans, credit card payments, or personal loans.

4 Interest Rate

Pick between a fixed or variable interest rate, based on your preference or options provided by your lender.

5 Rate Term

Select the term of the rate, which typically ranges from 3 to 10 years. This determines how long your mortgage rate will stay in place.

6 Amortization Term

Choose the amortization period for your mortgage. The most common options are 25 or 30 years, with longer terms lowering monthly payments but increasing the total interest paid.

GDS and TDS percentages

As you enter your details, the calculator instantly updates your GDS and TDS percentages, which are displayed in real time on the right side of the screen. This allows you to see whether you meet typical lender requirements. The built-in stress test feature shows you how different interest rates can impact mortgage eligibility, with clickable ratio boxes ranging from 32/40 to 39/44.

By adjusting your inputs, you can see their impact, and if you click on any one of the three ratios results boxes on the widget, your mortgage amount will adjust to let you know how much you can borrow and be aligned with the lender’s requirements.

Have additional questions about how much mortgage you can afford?

Reach out to our mortgage experts for personalized assistance and get the clarity you need to plan your next steps!

Understanding the Results

Once you’ve entered all the required information into the Debt Service Calculator, you’ll see a detailed breakdown of results that provide valuable insight into your mortgage affordability. Here’s how to interpret the results:

GDS Percentage

The Gross Debt Service (GDS) ratio represents the percentage of your gross income that goes toward covering housing costs, including:

Mortgage payments
Property taxes
Heating costs
Condo fees (if applicable)

This ratio carries a lot of weight because it shows how much of your income is being dedicated to home-related expenses. Most lenders prefer to see a GDS ratio of 32% or less, though some will accept ratios up to 35%, depending on other factors like your credit score and financial stability. A lower GDS ratio indicates that your housing costs are more manageable relative to your income.

TDS Percentage

The Total Debt Service (TDS) ratio takes things one step further by including all of your debt obligations, not just housing-related costs. It includes:

Your monthly mortgage payment
Property taxes, condo fees, and heat
Any additional debts, such as car loans, credit card payments, or personal loans

The TDS ratio which is your total debt service ratio, should generally be below 42% to keep your overall debt load manageable, although some lenders may allow up to 44%. The TDS ratio helps lenders evaluate whether you can comfortably handle all of your financial obligations, including housing, while still having enough income left over for other expenses.

Stress Test Rate

Canada’s B20 Guidelines require all mortgage applicants to undergo a stress test, ensuring they can afford their mortgage even if interest rates rise in the future. The stress test rate is typically 2% higher than your actual mortgage rate or a minimum qualifying rate.

In the calculator, the stress test is presented through three clickable approval levels based on different GDS/TDS thresholds:
32/40
35/42
39/44

By clicking on any one of these options, you can see how changing your debt ratio impacts the maximum mortgage amount you’re eligible for. This feature helps you understand how much of a buffer you have in case rates increase.

Breakdown of Costs

The results section provides a clear breakdown of your monthly expenses, helping you see exactly how your income is allocated. This includes:

Monthly Mortgage Amount

This is the estimated amount you’ll pay each month for your mortgage, based on your inputs. It factors the interest rate, amortization period, and mortgage amount you’ve selected.

Debt Payments

This shows the total amount of your other monthly debt obligations (e.g., car loans, credit cards, or student loans).omized mortgage solutions that fit your financial goals and unique needs.

Home Expenses

Includes ongoing home-related costs such as property taxes, heating, and condo fees. These expenses are part of your GDS and TDS ratios, so it’s important to account for them accurately.

Cash Left (Gross)

After deducting your mortgage payments and other debt obligations, this figure represents the disposable income you’ll have left each month. Having enough cash left over is critical for maintaining a healthy budget and ensuring you can cover unexpected expenses.

These results give you a detailed, real-time view of your financial situation and help you decide if your mortgage is affordable based on your income and expenses. By adjusting the inputs, you can try different scenarios and fine-tune your financial plan.

Still not sure what your GDS and TDS ratios mean for your mortgage eligibility?

Speak with one of our advisors for a detailed explanation applicable to your specific needs.

Additional Tips for Using the Debt Service Calculator

To make the most of the Debt Service Calculator, here are some tips to help you adjust the variables and explore different financial scenarios:

Adjusting the Mortgage Amount

One of the key features of the calculator is the ability to adjust the mortgage amount using the slider. This lets you see how borrowing more or less impacts your GDS and TDS ratios. By experimenting with different loan sizes, you can find the sweet spot between affordability and your desired mortgage amount. If increasing the mortgage amount pushes your GDS or TDS ratios too high, it may be worth reconsidering the loan amount to ensure it fits comfortably within your budget.

Experimenting with Interest Rates

The calculator allows you to choose between fixed and variable interest rates, and it’s a good idea to test both. Fixed rates offer stability, keeping your payments consistent, while variable rates fluctuate with market conditions. Changing the interest rate in the calculator lets you see how different rates affect your stress test results and the maximum mortgage amount you can qualify for. If interest rates rise, a higher stress test rate will lower the amount you’re eligible for.

Understanding the Impact of Debt

Accurately entering your monthly debts is crucial, as these directly influence your TDS ratio. Even small monthly payments like car loans or credit card minimums can significantly affect your affordability. Reducing or paying off debts can improve your TDS ratio, which may allow you to qualify for a larger mortgage. Consider how eliminating or lowering monthly debts could impact your mortgage eligibility and overall financial flexibility.

Factoring in Rental Income

If the property you’re purchasing generates rental income, make sure to include this in the calculator. Rental income helps offset your housing costs and reduces your TDS ratio, which could make it easier to qualify for a larger mortgage. This feature is especially useful for buyers who are purchasing investment properties or planning to rent out part of their home.

Planning for the Stress Test

The stress test feature is designed to help you plan for potential interest rate increases, ensuring that you can still afford your mortgage even if rates rise. By clicking on the different stress test ratios (32/40, 35/42, and 39/44), you can explore how your mortgage eligibility changes under various financial scenarios. This tool is invaluable for long-term planning, as it prepares you for the possibility of future rate increases and decreases, helping you make more informed decisions about your mortgage.

Concerned about passing the mortgage stress test?

Frequently Asked Questions

Understanding the many aspects of mortgages is not that straightforward, but we here at Dove Mortgages are here to help. Our FAQs section addresses common questions about mortgage calculations and home-buying processes. If you do not see your question answered below, remember that our team of mortgage professionals are always ready to assist you.

What is the Debt Service Calculator?

The Debt Service Calculator helps you determine your GDS (Gross Debt Service) and TDS (Total Debt Service) ratios. These ratios show what percentage of your income goes toward housing and debt payments, helping you assess whether you can afford the mortgage you want.

What is a good GDS and TDS ratio?

A good GDS ratio is typically below 32%-35%, and a good TDS ratio is under 42%-44%. Staying within these limits ensures that your housing costs and debts remain manageable, making it easier to get approved for a mortgage.

How does the stress test work in the calculator?

The calculator applies a stress test rate, which is generally higher than your actual interest rate, to make sure you can afford your mortgage if rates rise. The test ensures that your GDS/TDS ratios stay within acceptable limits, even with a rate increase.

How do monthly debts impact my TDS ratio?

Monthly debts such as car loans, credit card payments, and student loans are included in your TDS ratio. These payments increase your debt load, which can reduce the amount of mortgage you qualify for.

Can I adjust my down payment in the Debt Service Calculator?

The calculator focuses on debt service ratios rather than down payment adjustments. However, increasing your down payment outside of the calculator can reduce the loan amount needed and improve your ratios.

What’s the difference between a fixed and variable interest rate?

A fixed rate locks in your interest rate for the loan term, providing stability, while a variable rate fluctuates with market conditions, potentially lowering payments when rates are low but increasing them when rates rise.

How does the amortization term affect the results?

A longer amortization term (like 30 years) reduces monthly mortgage payments but increases total interest paid over time, while a shorter term (25 years) increases monthly payments but saves on interest.

What if I have no monthly debts?

If you have no monthly debts, your TDS ratio will only factor in your housing costs, which can improve your eligibility for a larger mortgage. The calculator adjusts your results accordingly.

How do I get a detailed report from the Debt Service Calculator?

After using the calculator, you can request a detailed written report, which provides a summary of your results, including your GDS/TDS ratios, maximum mortgage amount, and a breakdown of your monthly expenses.