The majority of lenders look at your Gross Debt
Service Ratio (GDS) and Total Debt Service Ratio (TDS) to determine eligibility.
What is Gross Debt Service Ratio?
The maximum percentage
of your gross income that is allocated to paying the costs
of carrying your home. This ratio includes your principal
and interest mortgage payment, property taxes, heating and/or
condo fees. To qualify, your monthly carrying costs cannot
exceed 32% of your gross monthly income.
What is Total Debt Service Ratio?
The TDS is the maximum percentage
of your gross income that can be used to pay your GDS plus
all other debts. This ratio includes everything from the GDS
as well as any other loans, credit cards or lines of credit.
To qualify it cannot exceed 40% of your gross monthly income.
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