How Banks Decide Your Limit
Banks use two main ratios to decide how much they will lend you:
- GDS (Gross Debt Service): Your housing costs (mortgage + heat + taxes) should not exceed ~32% of your gross income.
- TDS (Total Debt Service): Your total debt load (housing + cars + credit cards) should not exceed ~40-42% of your income.
This calculator focuses on the GDS ratio to give you a safe estimate of your buying power.