Mortgage Agent Licensing Practice Exam · Question
A mortgage applicant has a gross annual income of $80,000. Their principal, interest, taxes, and heating (P.I.T.H.) payments are estimated to be $2,100 per month. What is their Gross Debt Service (GDS) ratio?
The GDS ratio is calculated as (Monthly PITH / Gross Monthly Income) x 100. In this case, ($2,100 / ($80,000 / 12)) x 100 = ($2,100 / $6,666.67) x 100 = 31.5%.
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Question: A mortgage applicant has a gross annual income of $80,000. Their principal, interest, taxes, and heating (P.I.T.H.) payments are estimated to be $2,100 per month. What is their Gross Debt Service (GDS) ratio?
Answer options:
- 31.5% ✅ 30%
- 33.6%
- 28%
Correct answer: 30%
Explanation: The GDS ratio is calculated as (Monthly PITH / Gross Monthly Income) x 100. In this case, ($2,100 / ($80,000 / 12)) x 100 = ($2,100 / $6,666.67) x 100 = 31.5%. Generally, a GDS ratio should not exceed 32% for conventional mortgages, making 31.5% the closest correct answer.
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Question explanations
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- 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
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