Sharaz has gross household income of $3800 and wants to qualify for total monthly mortgage financing of $1330.Based on the gross debt service ratio,she should be approved.

Question

Quizplus · Accepted Answer

To determine if Sharaz should be approved for the mortgage financing, we need to calculate her gross debt service (GDS) ratio. This is the percentage of her gross income that goes towards housing-related expenses, including mortgage payments, property taxes, and heating costs.

According to the Canada Mortgage and Housing Corporation, a GDS ratio of 35% or lower is considered reasonable for most households. To calculate Sharaz's GDS ratio, we can add up her estimated monthly housing expenses and divide by her gross monthly income:

Housing expenses = $1330 (mortgage financing)
Gross monthly income = $3800

GDS ratio = (housing expenses / gross income) x 100
GDS ratio = ($1330 / $3800) x 100
GDS ratio = 35%

Since Sharaz's GDS ratio is 35% or less, she should be approved for the mortgage financing based on the gross debt service ratio. Therefore, the answer is A - True.

Sharaz Has Gross Household Income of $3800 and Wants to Qualify