Purchase Price
The amount of money paid for a property.

Amount of the Mortgage
The amount of money borrowed from a lending institution to help pay for a property.

Down Payment
The amount of money put forward by the purchaser. It represents the difference between the purchase price and the amount of the mortgage loan.

Term
The length of time which a mortgage agreement covers. Payments may not fully repay the outstanding principal by the end of a term because the amortization period is longer.

Amortization Period
The number of years it will take to repay a mortgage loan in full. This period can be greater than the term of the loan. For example, mortgages often have a five year term but a 25 year amortization period.

Gross Debt Service Ratio (GDSR)
The percentage of gross† annual income required to cover payments associated with housing (mortgage principal and interest, taxes, secondary financing, heating and 50% of condominium fees if applicable). Most lenders have established that GDSR should not exceed 32% of gross annual income.

Total Debt Service Ratio (TDSR)
The percentage of gross† annual income required to cover payments associated with housing and all other debts and obligations, such as payments on a car loan. Most lenders have established that the TDSR ratio should not exceed 40%‡ of gross† annual income.

†   Net income may apply in some circumstances.
‡   The maximum for mortgage approval may vary. For CMHC’s First Home Loan Insurance Program, the GDSR requirement is 35%.

Source: Ottawa Real Estate Board