Purchase power compared

Stated income vs a regular mortgage application

Same buyer, same down payment, two different sets of rules. See how qualifying income and ratio ceilings change what you can actually buy.

The short answer

A conventional bank file uses your net taxable income and caps debt service at 39% GDS / 44% TDS. A stated income file uses documented business revenue minus a reasonable expense factor, and many self-employed programs allow 50% GDS/TDS — some up to 60/60. On the same file, moving from 39% to 50% GDS supports roughly 30% more house; 60% GDS supports roughly 55% more.

Conventional bank file

Income = line 15000 net of write-offs
39% GDS / 44% TDS ceiling
T4s, pay stubs, two years of NOAs
Stress-tested at contract rate + 2%

Stated income file

Income = documented revenue less expense factor
Commonly 50% GDS / 50% TDS
12–24 months of business deposits, financials
Some lenders stretch to 60/60

Why the gap opens

Write-offs cut taxable income, not cash flow
A higher ratio ceiling releases the same cash flow
Both effects compound on the same file
Down payment and credit still drive pricing

Worked examples

Three purchase scenarios

Each scenario assumes 20% down, a 25-year amortization, a 5% contract rate qualified at 7%, property tax at 1% of value and $150/month heat. Numbers are illustrative only.

$500,000 purchase

A licensed electrician in Edmonton buying a first home with 20% down.

Down payment

$100,000

Mortgage amount

$400,000

Payment (qualifying rate)

$2,799/mo

Property tax + heat

$525/mo

Total housing cost

$3,324/mo

Underwriting approach	Ratio ceiling	Income needed	Does this buyer qualify?
Bank, net income $68,000	39 / 44	$102,283	Short by $34,283
Stated income, qualifying $139,750	50 / 50	$79,781	$59,969 room
Stated income, qualifying $139,750	60 / 60	$66,484	$73,266 room

The calculation

$215,000 documented revenue − 35% expense factor = $139,750 qualifying income

vs. net income on T1

$68,000

*Demonstration scenario only. Not a quote, approval or prediction. Actual qualifying income, ratio limits, rate and down payment vary by lender, credit profile and property.

$1,000,000 purchase

A commission realtor in the Fraser Valley moving up with 20% down.

Down payment

$200,000

Mortgage amount

$800,000

Payment (qualifying rate)

$5,598/mo

Property tax + heat

$900/mo

Total housing cost

$6,498/mo

Underwriting approach	Ratio ceiling	Income needed	Does this buyer qualify?
Bank, net income $96,000	39 / 44	$199,950	Short by $103,950
Stated income, qualifying $204,000	50 / 50	$155,961	$48,039 room
Stated income, qualifying $204,000	60 / 60	$129,968	$74,032 room

The calculation

$340,000 documented revenue − 40% expense factor = $204,000 qualifying income

vs. net income on T1

$96,000

*Demonstration scenario only. Not a quote, approval or prediction. Actual qualifying income, ratio limits, rate and down payment vary by lender, credit profile and property.

$1,500,000 purchase

An incorporated consultant in the GTA buying a detached home with 20% down.

Down payment

$300,000

Mortgage amount

$1,200,000

Payment (qualifying rate)

$8,398/mo

Property tax + heat

$1,275/mo

Total housing cost

$9,673/mo

Underwriting approach	Ratio ceiling	Income needed	Does this buyer qualify?
Bank, net income $140,000	39 / 44	$297,618	Short by $157,618
Stated income, qualifying $301,600	50 / 50	$232,142	$69,458 room
Stated income, qualifying $301,600	60 / 60	$193,452	$108,148 room

The calculation

$520,000 documented revenue − 42% expense factor = $301,600 qualifying income

vs. net income on T1

$140,000

*Demonstration scenario only. Not a quote, approval or prediction. Actual qualifying income, ratio limits, rate and down payment vary by lender, credit profile and property.

Purchase power

Same income, three ratio ceilings

What one qualifying income supports as a maximum purchase price when only the GDS ceiling changes — 20% down, 25-year amortization, qualified at 7%.

Qualifying income	Conventional 39% GDS	Stated 50% GDS	Stated 60% GDS	Extra at 60%
$85,000	$412,000	$534,000	$646,000	+$234,000 (57%)
$150,000	$744,000	$961,000	$1,158,000	+$414,000 (56%)
$220,000	$1,103,000	$1,420,000	$1,709,000	+$606,000 (55%)

All figures on this page are worked examples generated for demonstration purposes with a standard affordability calculation. They are not testimonials, quotes or guarantees of approval.

How stated income is calculated, step by step

Want these numbers run on your file?

Send your revenue, down payment and any existing debts and we'll show both the bank version and the stated income version.

Start an application Ask a question

Common questions

GDS, TDS and purchase power

The ratio questions self-employed buyers ask most.

What are GDS and TDS ratios?

Gross Debt Service (GDS) is the share of your gross annual income used for mortgage payment, property tax, heat and half of condo fees. Total Debt Service (TDS) adds all other debt payments. Conventional bank underwriting typically caps them at 39% GDS and 44% TDS.

Can stated income mortgages use higher GDS and TDS limits?

Yes. Many self-employed and alternative lending programs allow 50% GDS and 50% TDS, and some go to 60/60 with strong credit, a larger down payment and a marketable property. Higher ratios plus income based on documented revenue is what raises purchase power.

How much more house can a self-employed buyer afford with stated income?

Two things stack: the qualifying income is calculated from gross documented revenue rather than net taxable income, and the debt-service ceiling moves from 39% to 50% or 60%. On the same income, moving from 39% GDS to 50% GDS raises the supportable purchase price by roughly 30%, and 60% GDS by roughly 55%.

Do stated income mortgages still use the stress test?

Federally regulated lenders qualify at the higher of the contract rate plus 2% or 5.25%. Some provincially regulated and private lenders qualify closer to the contract rate, which further increases the amount available.

Is a higher GDS ratio risky?

It allows a larger mortgage relative to income, so it should be matched to real cash flow. Self-employed borrowers often carry higher ratios comfortably because their true earnings exceed the net income on a tax return, but the payment still has to be affordable in practice.

See what your revenue actually qualifies for

Send your details and we'll review your business income the way a self-employed lender does — no credit pull to start the conversation.

Start an application Ask a question first