Qualification
GDS and TDS
Also known as: Gross Debt Service, Total Debt Service
Two ratios lenders apply to your gross household income to determine the maximum monthly payment they'll qualify you for.
GDS (Gross Debt Service) caps housing costs (mortgage payment + property tax + heat + 50% of condo fees) at typically 39% of gross income. TDS (Total Debt Service) caps all debt service (GDS plus car loans, credit card minimums, lines of credit, etc.) at typically 44%.
Whichever ratio binds first is the constraint. The lender then reverses the amortization formula at the stress test rate to find the largest principal that fits inside the ratio. That number is your maximum mortgage. The Affordability Calculator runs both ratios.
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