Your Bank's Mortgage Formula
There are two commonly used factors that a bank will consider when determining the amount of mortgage a lender will provide - the GDS and the TDS.
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.
Note: Yellow fields will be calculated for you.