Gross debt service and total debt service (Ep. 15)

GROSS DEBT SERVICE RATIO and TOTAL DEBT SERVICE RATIO Mortgage Breakdown Ep. 15 - GDS and TDS

The 2 ratios we have to make sure are in line are GDS and TDS. These come into play for every single borrower, it doesn’t matter if it’s a purchase, refinance, switch, you can’t escape it.

The GDS is made up of:
- Mortgage payment (This is based off of the qualifying rate of 5.25%, not the rate you are actually getting)
- Property taxes
- Heat
- Condo payments (if the property is a condo)

The TDS is made up of:
- Everything in the GDS ratio
- Credit cards, lines of credit, student loans, car payments, and all other debts

You can only use up to 38.99% of your income towards GDS
You can only use up to 43.99% of your income towards TDS

If these happen to be out of line and over the maximum there are way to get them back in line, like more down payment, adding a cosigner, or going with alternating lending (if the down payment is high enough)

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