Gross Debt Service Ratio - GDS

You apply for a mortgage. The lender wants to know whether you can afford to make the monthly payments. One tool they turn to: Gross Debt Service Ratio.

Debt service refers to the amount of money it takes to remain current on a loan. In this case, we’re talking about your mortgage payment. If your monthly payment is $2,500, then $2,500 is your debt service for that loan.

The lender then compares the monthly payment by your income. How much of the cash you earn will go to paying the mortgage? If the ratio is too high (meaning an unmanageable chunk of your cash is going to go to repaying your mortgage), the lender will assume you won’t keep up with the payments over the long-term.