2. Figure Out Your Gross and Total Debt Service Numbers. As mentioned, the general rule of thumb for lenders is that their clients’ current monthly payments (including credit cards, lines of credit, car loans, property tax, utilities, etc.) should not amount to more than 42 per cent of their income. This number is referred to as your Total Debt Service (TDS) ratio, and if yours is over 42 per cent you should look at ways to reduce your debt before house hunting.
Another calculation banks make to qualify you for your home loan is your Gross Debt Service (GDS) ratio. For this number, add up all of your monthly property-related bills including such as utilities and property taxes. Then divide that number by your monthly income and multiply by 100. The basic rule for this ratio is that it not amount to more than 35 per cent of your gross family income.
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