"How much can I borrow for my house?" is the first question every first-time buyer in Quebec asks. The number your bank quotes over the phone is an estimate. The real answer depends on two precise ratios used by every Canadian lender: the GDS and the TDS. Here is the exact formula, with a concrete example and the limits the formula doesn't tell you about.
The two ratios that decide
GDS — Gross Debt Service
This is the percentage of your gross monthly income dedicated to housing costs. The formula:
GDS = (mortgage payment + property taxes + school taxes + heating + 50% of condo fees) / gross monthly income
Standard cap: most Canadian lenders accept up to 39% GDS. Beyond that, the file is refused by A lenders or redirected to an alternative lender with different conditions.
What GDS measures: your ability to carry housing costs on your current income, without considering your other debts.
TDS — Total Debt Service
This is GDS plus all your other monthly debts: credit cards (minimum payment), car loan, lines of credit, student loan, spousal support, everything that goes out each month. The formula:
TDS = (GDS costs + minimum payments on other debts) / gross monthly income
Standard cap: most lenders accept up to 44% TDS. This is generally the tighter constraint if you have active debts.
What this really measures
TDS is the absolute ceiling — the maximum monthly load a lender accepts against your income. A TDS of 44% means 44 cents of every pre-tax dollar you earn goes to debt payments (housing + other). It's a standard prudential rule in Canada since the 2000s.
Concrete example in Quebec
Profile: Montreal couple, two salaries.
- Total gross income: $120,000 / year → $10,000 / month.
- Car loan: $450 / month.
- Credit cards (minimum payment 3% of a $5,000 balance): $150 / month.
- No other loans.
Target property: $500,000 with a 20% down payment (mortgage of $400,000).
Housing costs:
- Mortgage payment (rate 4.89%, 25 years): $2,300
- Municipal taxes (annual $3,600): $300 / month
- School taxes (annual $600): $50 / month
- Heating: $100 / month
- Condo: none
Total housing costs: $2,750 / month
GDS calculation
GDS = 2,750 / 10,000 = 27.5%
Under the 39% cap.
TDS calculation
TDS = (2,750 + 450 + 150) / 10,000 = 33.5%
Under the 44% cap.
Conclusion: the file qualifies for this amount. There's even room to spare (10.5 points of TDS available) — meaning the couple can absorb a moderate rate hike or an additional debt before hitting the cap.
Mandatory stress test — what it actually changes
Since 2018, OSFI (Office of the Superintendent of Financial Institutions) requires a stress test: the lender must qualify your file not at the real rate, but at the contract rate + 2% OR 5.25%, whichever is higher.
In our example, a contract rate of 4.89% → qualification at 6.89%.
Payment at the stress test rate:
- $400,000 at 6.89%, 25 years → $2,790 / month (vs $2,300 at the actual rate).
GDS recalculated at the stress test:
Stress GDS = (2,790 + 300 + 50 + 100) / 10,000 = 32.4%
Still under 39%. The file passes.
The stress test's impact on maximum borrowing capacity
The stress test reduces borrowing capacity by roughly 20% for most files. Concretely:
- Without the stress test: qualification at $500,000 with this income.
- With the stress test: effective qualification around $400,000 (depending on current rates).
That's why many buyers think they can borrow more than what their bank offers. It's not an arbitrary refusal — it's the federal rule applied uniformly to all federally regulated financial institutions in Canada.
For more detail, read our complete guide to the mortgage stress test.
What the formula doesn't say
The GDS/TDS ratios give a maximum ceiling, not a target. Several factors beyond the numbers come into play at each lender:
Credit score
A credit score under 680 pushes some A lenders to tighten their acceptable ratios (e.g., 35% TDS max instead of 44%). Under 620, you shift toward B lenders — ratio caps may differ, but rates are higher.
Income stability
A 3-month job is treated differently from a 5-year job, even for the same salary. Most lenders require at least 90 days on the job (or at least 2 years if the probation period isn't completed).
Self-employed
A self-employed borrower's income is not the gross billed revenue — it's the 2-year average of declared net income (lines 9946 or T2125 depending on the format). If you deduct a lot of expenses, your qualifying mortgage income can be significantly below your actual take-home.
Source and form of the down payment
The source of the down payment is analyzed:
- Documented personal savings: the easiest — 90-day bank statements.
- Family gift: accepted with a gift letter (the donor confirms it's not a loan).
- FHSA or HBP-RRSP: specific rules — max amount, holding period, withdrawal form.
- Borrowed down payment: some lenders accept it but add the loan payments to the TDS calculation.
Why a broker sees more than the ratios
An AMF-licensed mortgage broker compares your file against several lenders with different qualification policies:
A banks (chartered banks): strict on GDS/TDS, full stress test, but the most competitive rates on solid profiles.
Desjardins caisses: regional flexibility — some local caisses can be more accommodating for established members with atypical files.
B alternative lenders: accept up to 50% TDS if offset by a higher rate and a minimum 20-25% down payment. Useful for files hard to qualify elsewhere.
Online (mono-line) lenders: algorithmic, fast, often very competitive on rates for standard profiles, but less flexible on out-of-the-box cases.
It's this parallel comparison — your file submitted simultaneously to 25-40 lenders — that maximizes your chances of landing the right lender for your profile, at the best available rate.
Estimating your own capacity upfront
Before contacting a broker or bank, you can estimate your range:
Step 1 — Calculate your gross monthly household income (total).
Step 2 — List your monthly debts (card minimums, loan payments, lines of credit).
Step 3 — Estimate housing costs for the target property (municipal taxes available on the city's assessment roll, heating $100-200 depending on size, condo fees if applicable).
Step 4 — Apply the 44% TDS ratio: monthly income × 44% = maximum total load (housing + debts). Subtract your debts to find the max housing budget.
Step 5 — Convert the max housing figure into a mortgage amount using an online mortgage calculator (current rate + 2% for the stress test, 25-year amortization).
This estimate gives you a ballpark. A broker refines it with each lender's exact policy — reality may be slightly more or less generous depending on your full profile.
What Courteo does
Courteo is not a broker. We connect you with an AMF-licensed mortgage broker who runs the real GDS/TDS calculation on your file, identifies which lenders give you the most room, and delivers a proper pre-authorization — not a web estimate.
Frequently asked questions about borrowing capacity in Quebec
Can rental income from another property be included in the calculation?
Yes, but partially. Most lenders accept 50% of gross rental income in the income calculation. Some Desjardins caisses and B lenders accept 80-100%. A signed lease or proof of current rent is required.
Do child benefits (provincial, Canada Child Benefit) count as income?
Provincial family allowances (like the Quebec program) and federal benefits (CCB) are generally accepted as qualifying income by most lenders, provided you have a history of receiving them and the children are under 16-18 depending on the lender's policy.
Does spousal support I receive count as income?
Yes, if it's stipulated in a court order or legal agreement and you can prove a 12-month history of receipt. Support you pay, on the other hand, is included in the TDS calculation as a monthly debt.
Can I borrow on a 30-year amortization in Quebec?
Since August 2024, 30-year amortization is accessible to first-time buyers on new-build properties, and since December 2024, on all properties for first-time buyers. For existing homeowners, the maximum amortization remains 25 years on insured loans (down payment under 20%). Uninsured 30-year is available at some lenders if the down payment is 20% or more.