Mortgage Agent Licensing Practice Exam · Question
A lender's 'debt service ratios' (GDS/TDS) are used to assess:
Lenders use debt service ratios, specifically Gross Debt Service (GDS) and Total Debt Service (TDS), to evaluate whether a borrower's income is sufficient to co
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Question: A lender's 'debt service ratios' (GDS/TDS) are used to assess:
Answer options:
- The property's market value. ✅ The borrower's capacity to manage their housing costs and total debt.
- The borrower's credit history only.
- The lender's profitability on the mortgage.
Correct answer: The borrower's capacity to manage their housing costs and total debt.
Explanation: Lenders use debt service ratios, specifically Gross Debt Service (GDS) and Total Debt Service (TDS), to evaluate whether a borrower's income is sufficient to cover their housing costs and all other debt obligations, respectively, ensuring affordability.
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Question explanations
- Which of the following is NOT a primary provider of mortgage default insurance in Canada?
- When must a mortgage agent provide the borrower with certain disclosures regarding the proposed mortgage, part
- Michael and Jennifer are applying for a mortgage to purchase a home in Calgary for $700,000. Their combined gr
- Which of the following scenarios would typically lead to a higher mortgage interest rate for a borrower?
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