Posted on: 05th Sep, 2006 12:03 am
If you are looking for a mortgage in Canada, check out the affordability rules that most lenders follow.
There are in general 2 affordability rules which provide lenders with a true picture of your financial situation.
There are in general 2 affordability rules which provide lenders with a true picture of your financial situation.
- Gross Debt Service Ratio:
Lenders in Canada try to find out if your monthly housing cost (monthly payment towards mortgage loan principal, interest, taxes and heating expenses, half of monthly condominium fees, total annual site lease for the leasehold period) is less than or equal to 32% of your gross household monthly income. This ratio is known as the Gross Debt Service or the GDS ratio.
- Total Debt Service Ratio:
The lenders will also determine if your total monthly debt is less than or equal to 40% of the gross monthly income. This ratio is known as the Total Debt Service or the TDS ratio. The total debt includes housing cost, credit card bills, car loans, and other debts.
take time to speak witha mortgage porfessional! often, the payment of commerical debt (credit cards, etc.) inside the refinance provides the low gds ratio target herein referred to. here in the us, the dti (debt-to-income ratio....i.e., the gds) can run as high as 60% and still qualify -- it's all up to the individual lender and the underwriting guidlelines at that instituttion.