Mortgage Glossary

Debt Servicing Ratios (GDSR and TDSR)

Debt Servicing Ratios

Debt servicing ratios, also known as debt-to-income ratios, are calculated a percentage of the borrower(s) gross annual income, needed to cover the mortgage payments along with other debts reported to their credit bureau.

What Is Gross Debt Servicing Ratio (GDSR)?

The gross debt servicing ratio (GDS for abbreviation), is the percentage of income required to cover mortgage payments, property tax, heat and 50% of condominium maintenance (if applicable). If a borrower has an Equifax beacon score of 680 and above, banks will allow for gross debt servicing ratio to go up to 39%. If a borrower has a beacon score of 679 and under, banks will approve a mortgage if the gross debt service ratio is 35% and below.

What Is Total Debt Servicing Ratio (TDSR)?

Total debt servicing ratio (TDSR for abbreviation), is the percentage of the income required to cover all things in the gross debt servicing ratio, plus debts that are reported to the borrower(s) credit bureau report, including credit card payments, car loans, student loans, line of credits, as well as the expenses for any other properties they own. If a borrower has an Equifax beacon score of 680 and above, banks will allow a total debt servicing ratio of up to 44%, and for beacon scores below 680 the total debt servicing ratio cannot exceed 42%

 

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