Income is not low — so why is the mortgage amount still not as high as expected?

When clients first start looking at mortgage options, the main thing they focus on is usually income.

A lot of people assume that as long as their income is strong enough, their mortgage amount should be more or less straightforward. But in actual underwriting, lenders do not look at income alone. More importantly, they look at your debt service ratios. In Canada, both official government guidance and CMHC treat GDS and TDS as key metrics in mortgage qualification.

Put simply, lenders use an internal calculation process. They first look at your current income, then the fixed costs associated with the property, and also any existing debts you already have. From there, they use these ratios to determine whether your overall payment burden is within a reasonable range.

What does GDS measure?

GDS mainly looks at the monthly carrying cost of the property itself.

This generally includes:

• Mortgage payment

• Property taxes

• Heating costs

• A portion of strata fees / condo fees

In other words, the lender first looks at how much fixed housing cost the client would need to carry each month after purchasing the property.

That is why clients sometimes find that two properties in a similar price range can lead to different mortgage results. The reason is often not a change in income, but a difference in carrying costs.

Even when two properties are similarly priced, if one has higher strata fees or higher property taxes, the GDS will be higher, which can reduce the available borrowing room.

What does TDS measure?

TDS builds on GDS by adding the client’s existing debt obligations.

For example:

• Car loan

• Credit cards

• Line of credit

• Student loans

• Installment payments

• Other mortgages

So TDS does not just look at housing costs alone. It looks at the client’s overall debt burden.

This is also why some clients may have solid income, but their mortgage amount still does not come back as high as expected. The issue is often not the income itself, but the fact that existing debt has already taken up a meaningful portion of their repayment capacity.

The difference between the two

Simply put:

GDS looks at the property-related burdenTDS looks at the overall debt burden

One focuses on housing cost, while the other looks at the client’s full debt structure.

Lenders review both ratios because underwriting is not just about whether a client can purchase the property. It is also about whether their cash flow will remain healthy and sustainable after the purchase.

Why are these two numbers so important?

Because they directly affect three things.

First, they affect mortgage amount.Two clients with similar income can qualify for very different mortgage amounts if their debt situations are different.

Second, they affect property budget.Some properties may not seem expensive at first glance, but if the carrying costs are high, they can still reduce borrowing capacity.

Third, they affect how smooth the approval process will be.If income, liabilities, and property costs are not reviewed clearly from the beginning, it can lead to gaps in expectations, additional document requests, and a more difficult approval process.

In real underwriting, lenders are not only looking at what you earn — they are looking at what is left over

This point is very important.

Mortgage approval is not based simply on how much a client earns in a year. It is based on whether, after accounting for housing costs and existing debt obligations, the client still has a reasonable overall repayment capacity.

So in many cases, when the approved amount comes in lower than expected, it does not necessarily mean the client has a weak profile. It often means the lender is taking a broader view of risk and cash flow.

From a planning perspective, it is always better to understand this early

Understanding your GDS and TDS before making an offer is much more useful than only checking affordability after the contract is signed.

Once income, debt, and property budget are properly lined up from the start, the product selection, mortgage structure, and overall approval strategy become much clearer.