GDS/TDS (Debt Service Ratios)

Quick Summary

Ratios that compare your housing and total debt costs to your income.

ELI5 Explanation

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They measure whether your monthly debts are “too big” for your paycheque.

Detailed Explanation

GDS (Gross Debt Service) focuses on housing costs like mortgage payment, property taxes, and heating. TDS (Total Debt Service) adds other obligations like car loans and credit cards. These ratios are central to bank qualification and often referenced in stress test calculations.

Example

A borrower with high car payments may fail TDS even if the mortgage payment itself seems affordable.

Why It Matters

Strong equity is helpful, but income and debt ratios still matter for many lenders and exit plans.