The basics are pretty simple, and expected for anyone who has borrowed funds before. Mortgage brokers and lenders will require access to your credit history, bank and employment information, previous property ownership history and anything else that may apply to a loan on a large scale.
Most lenders use two simple calculations to determine the average mortgage allowance. Almost everyone measures upon buyers’ Gross Debt Service Ratio (GDS) and Total Debt Service Ratio (TDS).

The math is easy. Anyone who has ever had to budget already knows the answers!

Generally, the ideal percentage for your GDS hovers at 35 per cent, and the ideal Total Debt Service Ratio TDS is no more than 42 per cent.

The Gross Debt Service Ratio

This ratio considers payments associated with housing.


(monthly mortgage payment + property taxes
+ utilities ) x 100
÷ your gross monthly income


Example (monthly):
Mortgage payment $1,500
Property taxes + $250
Utility costs + $85
 
Total $1,835


x 100 = $183,500


Monthly gross income ÷ $6,000
Gross debt service ratio = 30.6%

The Total Debt Service Ratio

This ratio considers all monthly debts calculated against your gross monthly income.


(monthly mortgage payment + property taxes
+ utilities + all other debts) x 100
÷ your gross monthly income


Example (monthly):
Mortgage payment $1,500
Property taxes + $250
Utility costs + $85
Other debts (credit cards, loans)+ $450
Total $2,285


x 100 = $228,500


Monthly gross income ÷ $6,000
Total debt service ratio = 38.1%