The Debt Service Ratio (DSR) calculates the percentage of your gross monthly income needed to meet your monthly debt obligations. DSR can further be broken down into the Gross Debt Service (GDS) calculation and the Total Debt Service (TDS) calculation. The DSR includes all the costs associated with shelter (rent or mortgage payments, maintenance fees, property taxes and heating costs). The TDS includes all the GDS expense plus any debt payments including leases, loans, lines of credit, and credit cards. The higher the ratio, the less money available to increase your borrowing, or to meet your other financial commitments, cash flow needs or other goals. Lenders have guidelines on how low your DSR needs to be to be approved for a loan.
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