Mortgage Debt Ratios

Lenders have long relied on two standard measures of one's "ability to pay": 

Gross Debt Service (GDS): The percentage of the borrower’s income that is needed to make all payments for costs associated with housing.  Costs include principle, interest, taxes, heat, and 1/2 condo fees.

Total Debt Service (TDS):  The percentage of the borrower’s income that is needed to cover housing costs (GDS) plus any other loans that an individual has, such as credit cards and car payments.

The acceptable ratios for both have generally been 32% and 40% respectively.