Debt Service Ratios (GDS and TDS)
Definition
GDS and TDS are the two ratios lenders use to measure how much of your gross income goes to housing costs and to total debt payments.
How it works
Gross debt service compares your housing costs — mortgage payment, property taxes, heating, and half of any condo fees — to your gross income. Total debt service adds every other monthly obligation: car loans, student loans, lines of credit, and credit card minimums.
The usual limits are 39% for GDS and 44% for TDS on insured mortgages, though strong credit and larger down payments can support some flexibility, and alternative lenders work with higher ratios at higher rates.
These ratios explain why paying off a car loan can increase your mortgage approval more than saving the same amount of cash. Reducing a recurring monthly payment frees room inside the TDS limit immediately.
Quick facts
- GDS covers housing costs only; TDS covers all debt.
- Common limits: 39% GDS and 44% TDS.
- Clearing monthly payments can raise your approval amount.
Put this into practice
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