Total debt service

Definition

Total debt service ratio (TDS): the share of your gross income going to housing and all your other debts. On top of housing costs, it adds credit card payments (often 3% of the balance, even if you pay more), lines of credit, car and student loans, and support payments where applicable. The usual cap is 44% on an insured loan. Example: income of $8,000 a month; 44% gives $3,520. With a $450 car loan and a card carrying $6,000 counted at $180, $2,890 is left for housing, less than the $3,120 allowed by GDS. So TDS is the binding limit. Paying off the car loan before applying frees $450 a month of capacity, roughly $70,000 more loan.