Christine Buemann Mortgage Broker

“Debt servicing” is your ability to meet all payments without exceeding the income received by you. There are two ratios that are examined by financial institutions to determine whether you can debt service a mortgage. The first one is called the “gross debt service” ratio and the second is called the “total debt service” ratio. With the gross debt service ratio, a lender looks at your annual income in comparison to your proposed annual mortgage payments (including heat and property taxes). This ratio cannot exceed 35%. For those who have exceptional credit, the allowable GDS ratios can increase to as high as 39%. Once you meet these criteria, the lender then examines your total debt service ratio. This ratio involves comparing your annual income to the total amount of debts you have (the proposed mortgage payment, credit cards, loans, personal lines of credit, support payments and all other financing obligations). Generally, this ratio cannot exceed 42%. For those who have ex...

There are 2 different ratios that lenders use in order to determine your maximum mortgage amount. (GDS) Gross Debt Serving Ratio : This pertains to the costs associated with owning the home. That includes your mortgage payment, property taxes and heat. Traditionally $100 flat rate has always been used for the heat amount, however since the mortgage changes last year that amount will vary by lender. No more than 35% of your gross income can be used towards the combined total of those expenses. If you have a credit score above 680, that is increased to 39%   (TDS) Total Debt Servicing Ratio: That includes all of the expenses listed for the GDS as well as any other monthly obligations. That could be credit cards payments, loans, child support ext. Keep in mind that for most revolving credit (credit cards, lines of credit ext.), they will use at least 3% of the balance as your monthly payment. No more than 42% of your gross income can be used towards all of your debts c...

Do you want to know what size of mortgage you qualify for but are unsure of what income to use? When calculating debt ratios, it is very important to know how much to use as your qualifying income. Here are a few basic guidelines: L enders will use the average of your last 2 year's Gross income if: ·          your income fluctuates ·          you receive bonuses or overtime ·          you are part time (unless you are guaranteed a certain number of hours) ·          you are self-employed ·          you are paid on commission ·          you are paid as a sub-contractor ·          you are using pension income ·          you are using investment income This amo...

If you are putting less than 20% down then your mortgage will be insured through CMHC, Genworth or Canada Guaranty. They all have a strict set of qualifying guidelines and most lenders follow these guidelines for borrowers with more than 20% down as well. There are 2 different ratios that they consider along with your credit score. The first is the Gross Debt Servicing Ratio (GDS). You can figure this out by breaking down your gross annual income to monthly. Only 35% of your income can be used towards your mortgage payment, monthly property taxes and heat (they usually use $100 for heat). The second is the Total Debt Servicing Ratio (TDS). For this calculation, they also use your gross income and new mortgage payment, property taxes and heat but this time they factor in all of your other debts including credit cards, loans, child support ext. Generally no more than 42% of your income can be used towards all of your debts combined. For those who have exceptional credit (680 or hi...