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Calculate
Debt Service Ratios
DETERMINE
HOW MUCH DEBT YOU CAN HANDLE
Aim
at consuming no more than about 32% of your gross monthly (pre tax)
income
for housing payments (including heat, property taxes and, if
applicable,
50% of condominium fees if you are thinking of a "condo"). This amount
is referred to by mortgage lenders as the Gross Debt Service Ratio
(GDS).
Do this calculation to find out how much you can put towards housing
payments.
|
Description/Details
|
Value
|
Your
gross monthly income
(before
taxes & deductions) |
$
______________ |
| Your
spouse's gross monthly income |
$
______________ |
| Other
income (monthly) |
$
______________ |
| TOTAL |
$
______________ |
| Multiply
the total by 32% to find out your monthly mortgage payment ceiling |
$
______________ |
Total
Debt Service Ratio
You
may have other monthly financial obligations such as car and credit
card
payments, property taxes, other loans, etc. The relationship between
these
all monthly debts plus your mortgage, and your gross monthly income is
called Total Debt Service Ratio (TDS). The general rule is that these
total
monthly payments should not exceed 40% of your income.
|
Description/Details
|
Value
|
| Monthly
debt payments |
$
______________ |
| Monthly
mortgage payments |
$
______________ |
| TOTAL |
$
______________ |
| These
payments should consume no more than 40% of your total gross monthly
income
(your annual income before taxes & deductions divided by 12). |
$
______________ |
Formula
for calculating the TDS ratio is:
MORTGAGE
PAYMENT + TAXES + HEATING + ALL OTHER DEBTS X 100
GROSS MONTHLY INCOME
If
your GDS and TDS ratios are very close to maximum, you will need to
carefully
consider how all your living expenses can be met before making a
commitment.
Use this worksheet as tool to calculate and analyze your financial
situation
and use this information as a guideline in establishing an appropriate
price range for your new home.
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Commercial
Listings
