Given the following,calculate the GDS ratio.All income and expense items are annual.
A) 28%
B) 41%
C) 44%
D) 52%
E) 63%

Question

Given the following,calculate the GDS ratio.All income and expense items are annual. 
A) 28% 
B) 41% 
C) 44% 
D) 52% 
E) 63%

Quizplus · Accepted Answer

To calculate the GDS (Gross Debt Service) ratio, we need to divide the total annual mortgage payments (principal and interest), property taxes, and heating expenses by the borrower's annual gross income.

Total annual mortgage payments = $10,800 + $4,800 = $15,600

Total annual property taxes = $4,000

Total annual heating expenses = $1,200

Total annual debt service = $15,600 + $4,000 + $1,200 = $20,800

Annual gross income = $48,000

GDS ratio = (Total annual debt service / Annual gross income) x 100
GDS ratio = ($20,800 / $48,000) x 100
GDS ratio = 0.4333 x 100
GDS ratio = 43.33%
GDS ratio = 44% (rounded to the nearest whole number)

Therefore, the best choice is C) 44%.

Given the Following,calculate the GDS Ratio