What is the maximum gross debt service ratio typically allowed for mortgage qualification in Canada?
Correct Answer
A) 39%
The maximum gross debt service ratio is typically 39% of gross household income. This ratio includes principal, interest, taxes, heating, and 50% of condo fees (PITHC), ensuring borrowers don't overextend on housing costs.
Why This Is the Correct Answer
Option A (39%) is correct as it represents the standard maximum Gross Debt Service ratio used by Canadian lenders and CMHC. This threshold has been established through industry practice and regulatory guidance to ensure borrowers can sustainably manage housing costs. The 39% limit applies specifically to housing expenses (PITHC) and is widely recognized across Canadian financial institutions as the benchmark for mortgage qualification assessment.
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