What is GDS and TDS ratio in Canadian mortgage qualification?

GDS (Gross Debt Service) ratio is your total monthly housing costs (mortgage payment + property taxes + heating + 50% of condo fees if applicable) divided by your gross monthly income. The maximum GDS allowed is 39%. TDS (Total Debt Service) ratio adds all other monthly debt payments (car loans, student loans, credit cards) to the housing costs. The maximum TDS is 44%. Both ratios are calculated using the stress test qualifying rate, not your actual contract rate.

What closing costs should I budget for when buying a home in Calgary?

When buying a home in Calgary, budget for these closing costs: legal/conveyancing fees ($1,200–$2,000), home inspection ($400–$600), title insurance (~$300), property tax adjustment (varies), and moving costs. As a general rule, budget approximately $3,800 in fixed costs plus 0.5% of the purchase price as a variable component. Importantly, Alberta has NO provincial land transfer tax — a significant saving compared to Ontario or BC where land transfer tax alone can exceed $10,000 on a $700K home.

Calgary Mortgage Calculator 2026 | CMHC, Stress Test & Affordability

Q: Why does a Canadian mortgage calculator use semi-annual compounding?

Canadian law (the Interest Act) requires that mortgages compound no more than semi-annually. This means interest compounds twice per year rather than monthly (as in the US). The effective monthly rate is calculated as (1 + annual_rate/2)^(1/6) - 1. This makes Canadian mortgage payments slightly lower than US equivalents at the same stated rate.

Q: What is the mortgage stress test in Canada for 2026?

The Canadian mortgage stress test requires that borrowers qualify at the higher of: (a) their contract interest rate plus 2%, or (b) 5.25%. This is the qualifying rate used by lenders and OSFI to ensure borrowers can still afford payments if rates rise. Even if you get a rate of 4%, you must qualify as if your rate were 6%. This stress test applies to all federally regulated lenders.

Q: How is CMHC mortgage insurance calculated in Canada?

CMHC (Canada Mortgage and Housing Corporation) default insurance is required when your down payment is less than 20% of the purchase price (and the home is under $1.5M). The premiums are: 5–9.99% down = 4.00% of the loan amount; 10–14.99% down = 3.10%; 15–19.99% down = 2.80%. The premium is added to your mortgage principal, not paid upfront. With 20% or more down, no CMHC insurance is required.

Home Price ($)

Down Payment (%)

Interest Rate (% annual)

Amortization

Payment Results

Monthly Payment
—

Down Payment Amount

—

Loan Amount

—

CMHC Insurance

—

Total Interest Over Term

—

Closing Costs & Cash to Close

Est. Closing Costs

—

low estimate

Closing Costs (high est.)

—

high estimate

Total Cash to Close
—
down + mid closing est.

Uses Canadian semi-annual compounding: effective monthly rate = (1 + annual_rate/2)^1/6 − 1. CMHC rates: <10% down = 4.00%, 10–14.99% = 3.10%, 15–19.99% = 2.80%, ≥20% = $0. CMHC premium is added to the mortgage principal. Closing costs include fixed items (legal $1,500 + inspection $500 + title insurance $300 + tax adjustment $1,500 = $3,800) plus 0.5% of purchase price variable. Alberta has no provincial land transfer tax. All figures are estimates — consult a licensed mortgage professional for exact numbers.

Annual Gross Household Income ($)

Monthly Debt Payments ($)

Car loans, student loans, credit cards, etc.

Down Payment Available ($)

Interest Rate (% annual)

Amortization

Stress Test Rate — (max of contract rate + 2%, or 5.25%)

Affordability Results

Max Purchase Price
—
based on GDS 39% limit

Monthly Payment (actual rate)

—

Stress Test Max Price
—
what you actually qualify for

Monthly Payment (stress rate)

—

Debt Ratios

GDS Ratio

—

Max allowed: 39%

TDS Ratio

—

Max allowed: 44%

GDS = (monthly mortgage + est. property tax $350/mo + est. heating $150/mo) / gross monthly income. TDS = (GDS costs + monthly debts) / gross monthly income. Stress test qualifying rate = max(contract rate + 2%, 5.25%). "Max Purchase Price" is solved so that GDS ≤ 39% at the stress test rate, then the actual monthly payment is calculated at your contract rate. CMHC insurance is applied when down payment < 20% of purchase price. Estimates only — speak with a licensed mortgage broker for a formal pre-approval.

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Mortgage FAQ

Canadian Mortgage Math, Explained

Why does a Canadian mortgage calculator use semi-annual compounding?

Canadian law (the Interest Act) requires that mortgages compound no more than semi-annually — meaning interest compounds twice per year, not monthly like in the US. The effective monthly rate is calculated as (1 + annual_rate/2)^1/6 − 1. This makes Canadian payments slightly lower than US equivalents at the same stated annual rate, which is good news for borrowers.

What is the mortgage stress test in Canada for 2026?

The mortgage stress test requires you to qualify at the higher of: your contract rate + 2%, or 5.25%. So even if you lock in at 4.5%, you must prove you can afford payments at 6.5%. This applies to all federally regulated lenders (banks, credit unions regulated federally). The purpose is to ensure you can still make payments if rates rise after you buy. Your stress test qualifying rate is shown in the Max Affordability tab above.

How is CMHC mortgage insurance calculated in Canada?

CMHC default insurance is required when your down payment is less than 20% (on homes under $1.5M). The premium is a percentage of the loan amount — not paid upfront, but added to your mortgage. Current rates: 5–9.99% down = 4.00% of loan; 10–14.99% = 3.10%; 15–19.99% = 2.80%. Example: $600K home with 10% down ($60K) = $540K loan × 3.10% = $16,740 CMHC premium added to your mortgage, making it $556,740. At 20%+ down, no CMHC insurance is required.

What are GDS and TDS ratios in Canadian mortgage qualification?

GDS (Gross Debt Service) = your monthly housing costs (mortgage + property tax + heating + 50% of condo fees) divided by gross monthly income. Maximum GDS is 39%. TDS (Total Debt Service) = GDS costs plus all other monthly debts (car loans, student loans, minimum credit card payments) divided by gross monthly income. Maximum TDS is 44%. Both ratios are calculated using the stress test qualifying rate, not your actual contract rate. Exceeding either limit means you don't qualify for that mortgage.

What closing costs should I budget for in Calgary?

Budget roughly 1.5–2.5% of the purchase price for closing costs in Calgary. Fixed items include: legal/conveyancing fees ($1,200–$2,000), home inspection ($400–$600), title insurance (~$300), and a property tax adjustment. The good news: Alberta has no provincial land transfer tax, saving you $5,000–$12,000+ compared to buying in Ontario or BC. The calculator above estimates closing costs as $3,800 fixed + 0.5% of the purchase price variable, which gives a practical low-to-high range.

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