How to figure out: Your GDS (gross debt ratio)…what you need to know before buying a house

So you want to buy a house?

Here is some numbers you need to know first.

Gross income

Mortgage payment

Property taxes

Formula is Mortgage payment + Property taxes + heating cost (or 50% of condo fees)
—————————————————————————
Gross Income

Here is an example:

Mortgage payments $1360/ month ($16,320/year)
Heating $2,000/year
Property Taxes $4,600

Gross income $80,000

$16,320 + $4,600 + $2,000
—————————
$80,000

The ratio is 29% The limit or max is 32%.
Note: a job loss or a disability could wipe this person out unless they had at least 3-6 months of cash on hand.