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Mortgage Qualifier
A mortgage qualification is generally based on your income, versus your debts. There are two debt ratio’s that lenders work off of and they are; Gross Debt Service, and your Total Debt Service.
The differences between the two are this:
- Gross Debt Service: The ratio of the borrower’s annual income relative to annual mortgage payments, property taxes, condo fees and allowance for heat.
- Total Debt Service: The ratio of total annual income relative to a borrowers total payments. GDS payments plus other debts such as bank loans, finance company loans, credit card payments, car payments etc.
With newer developments in the mortgage industry, your allowance of the ratio will depend on how high your credit score is. If your credit score is under 680, then your allowance for Gross Debt Service is 35% and your total Debt Service allowance is 42%. However, if you have a credit score of 680 or higher, then there is no limit placed on your Gross Debt Service, and your Total Debt Service allowance is 44%.
Some lenders will qualify with higher debt service ratio allowances. Please contact us for further details.
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