Total Debt Service
Ratio is a debt service measure that
financial lenders use as a rule of
thumb to give a preliminary assessment of
whether a potential borrower is already in
too much debt. More specifically, this
ratio shows the proportion of gross income
that is already spent on housing-related and
other similar payments.
Most lenders require
an applicant to meet a particular TDS ratio,
in addition to the
GDS ratio. As with the GDS, required TDS
ratios vary from lender to lender but most
are in range of 35% to 40%.
Receiving a ratio of less than 40% means
that the potential borrower has an
acceptable level of debt.
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