Ask most people what determines how much house they can buy, and you’ll hear two answers: credit score and down payment. Both matter. Neither is the number that actually decides your ceiling.

The number that does the real capping is called your debt service ratio — and lenders use it on every single application. It’s not a secret. It’s just rarely explained, because it’s boring math instead of a headline number like your credit score.

Two Ratios, One Job

Lenders calculate two of them:

• GDS (Gross Debt Service): your housing costs as a percentage of gross monthly income.
• TDS (Total Debt Service): housing costs plus every other debt payment you carry, as a percentage of that same income.

Most lenders want GDS at or below 39% and TDS at or below 44%. Go over either one, and it doesn’t matter how good your credit score is — the lender caps your mortgage right there.

Why This Catches First-Time Buyers Off Guard

A buyer has a strong credit score, a healthy down payment, feels confident going in. Then a car lease or a chunk of credit card debt quietly eats into their TDS room, and the number they qualify for comes in well below what they expected.

In a real Halifax example this year, a household earning $95,000/year had $610/month in existing car and credit card payments. That single number dropped their effective housing budget by $610 every month — real purchase-price room lost, before they’d even started house hunting.

What You Can Do About It

• Get your ratios calculated before you shop — not after you’ve found the house.
• Pay down or pay off small revolving debt before applying.
• Know the difference between pre-qualified and pre-approved — a pre-qualification often doesn’t reflect your real ratios at all.
• Ask directly what your GDS and TDS numbers are — any broker running your file should be able to tell you.

This isn’t a number designed to trip you up. It’s the actual measuring stick your lender is using the whole time — you just deserve to see it before you fall in love with a house it won’t support.

Read the full breakdown, with a real worked example, on MortgageClarity.ai →

I look forward to hearing from you in regard to your mortgage needs.
902-465-5533. I answer.
Patrick

p.s— You can click on this link to start the process whenever you are ready. Schedule your meeting with me here.
p.s.s— I should tell you that I am licensed in Nova Scotia Brokerage (2025-3000179) Broker (2025-3000180), Ontario (M23006699).
p.s.s.s— You can download my new mortgage app here

Patrick Sawler is a mortgage broker and owner of Craigburn Capital, licensed in Nova Scotia and Ontario, with private financing available in New Brunswick and PEI. He answers his phone.

Ready to have a real conversation? Call 902-465-5533 or start your application here.