GDS/TDS Ratios: How to Calculate Them Without Getting It Wrong

You added up the income, subtracted the debts, and the file seemed to work in your spreadsheet. Then the underwriter comes back with a different number, because a line of credit or a support payment wasn't included in the right place. GDS and TDS ratios look simple on paper, but it's often the inclusion details that make the difference between an approval and a decline.

What is the GDS ratio?

The Gross Debt Service ratio (GDS) measures the portion of the household's gross income spent on housing costs: mortgage payment (calculated at the qualifying rate), property taxes, heating, and half of condo fees where applicable. Lenders generally use a threshold of 39% or less.

What is the TDS ratio?

The Total Debt Service ratio (TDS) adds all other recurring debt obligations to the GDS: credit card payments, car loans, lines of credit, support payments, student loans. The threshold usually applied is 44% or less.

• GDS: housing costs only, threshold ≤ 39%
• TDS: housing costs + all other debts, threshold ≤ 44%
• Both ratios use gross household income, not net income
• Both are calculated using the qualifying rate, not the contract rate

Direct question: why is my TDS ratio over 44% when the client seems to have a good income?

It's almost always a forgotten or misreported debt: a credit card balance tracked at the minimum payment instead of the required payment, a line of credit with a variable balance, or a support payment that doesn't show on the credit report but must be declared. The TDS ratio is sensitive to every recurring debt, even a small one, and a missed $150 a month can be enough to push a file over the threshold.

Common mistakes in an Excel spreadsheet

Manual calculation in Excel has several traps: a copied formula pointing to the wrong cell after a row was added, a contract rate used by mistake instead of the qualifying rate, a debt counted twice because two brokers worked on the same file, or simply net income used instead of gross income. These errors are hard to spot visually, especially under time pressure.

How CourtierIQ automates pre-qualification

CourtierIQ calculates GDS and TDS ratios in real time from the data entered in the file: income, debts, taxes, heating, and condo fees. The software applies the thresholds used by lenders and the qualifying rate automatically, with no formula to rebuild or check manually.

• GDS and TDS ratios calculated simultaneously on every entry
• Visual alert when a threshold is exceeded
• Breakdown of every debt item included in the calculation
• Multiple scenarios compared to find a structure that qualifies

This automation doesn't replace your professional judgment, but it removes calculation errors and lets you tell a client, at the very first meeting, whether they're actually qualified — not just probably qualified.

To see GDS/TDS ratio calculation in action on your own files, try CourtierIQ free for 14 days.