Debt Service Ratios

There are two commonly used factors that a bank will consider when determining the amount of mortgage a lender will provide.

These factors are:

• Gross Debt Service Ratio (or, GDS)

  This "rule" states that your monthly HOUSING costs must not exceed 32% of your gross family income. To calculate this value, the bank will consider your monthly mortgage payments, your heating costs, your condo fees (if applicable), and property taxes. You must also include any repayments you must make back to your government retirement plan if you borrow against it to make your downpayment.

• Total Debt Service Ratio (or, TDS)

  This "rule" states that ALL of your monthly costs must not exceed 40% of your gross family income. To calculate this value, the bank will consider all of the same expenses as in your GDS, PLUS, your credit cards, lines of credit, phone bill, cable TV, etc.

Your lender may consider just the TDS. Or, the may consider your GDS. You can find both values here. To do this, in Step 1, Enter gross income. Then in Step 2, enter your monthly bills. First, enter just your housing expenses (which will determine your GDS), then enter the rest of your bills (which will be used for your TDS).

The maximum amount of a monthly payment you can afford is either

1. Your GDS minus your housing costs, or
2. Your TDS minus all of your monthly expenses.

For an example calculation of the GDS & TDS - click here.

Step 1. Your Gross Income

Your GDS & TDS Calculator
Gross Income
Enter your gross (before taxes) monthy paycheck:	$
Your spouse's gross monthy paycheck:	$
Any other income you and your spouse have (from investments, or other sources):	$
TOTAL GROSS INCOME	$

A - Your GDS	$			B - Your TDS	$

Now, use this next table to find out just how much your monthly payments are.

Step 2. Your Monthly Expenses

Your GDS & TDS Calculator
GDS Part (Housing Costs)
Anticipated Property Taxes	$
Anticipated Heating Costs	$
Condo Fees (if applicable).	$
RRSP, or 401k repayments (if applicable).	$
C - TOTAL HOUSING EXPENSES	$
TDS Part (Housing cost plus all other costs)
Car payments or leases.	$
Credit card payments.	$
Line of credit payments.	$
Telephone, Internet & Cable TV.	$
Water bill.	$
Other loan payments (i.e. student loan).	$
Any other payments.	$
TOTAL MONTHLY EXPENSES	$
D - MONTHY EXPENSES - GRAND TOTAL	$

See your results of Step 1 and Step 2 here:

Step 3. Your Maximum Allowable Monthly Mortgage Payment

Your Maximum Allowable Monthly Mortgage Payment<
Your GDS (from line A in Step 1)	$
Your TDS (from line B in Step 1)	$
Your Monthly Housing Expenses (from line C in Step 2)	$
Your Grand Total of All Monthly Expenses (from line D in Step 2)	$
Maximum Mortage Payment Allowed - Using Your GDS	$
Maximum Mortage Payment Allowed - Using Your TDS	$