A borrower has a gross annual income of $90,000, property taxes of $4,800 annually, heating costs of $1,200 annually, and a car loan payment of $400 per month. They are applying for a mortgage with a monthly payment of $2,300. What is their Total Debt Service (TDS) ratio?

Question: A borrower has a gross annual income of $90,000, property taxes of $4,800 annually, heating costs of $1,200 annually, and a car loan payment of $400 per month. They are applying for a mortgage with a monthly payment of $2,300. What is their Total Debt Service (TDS) ratio?

Answer options:

• 35.33%
• 39.00% ✅ 42.67%
• 44.00%

Correct answer: 42.67%

Explanation: TDS = (P.I. + Taxes + Heating + Other Debts) / Gross Annual Income. Monthly Debt Service = $2,300 (P.I.) + ($4,800/12) (Taxes) + ($1,200/12) (Heating) + $400 (Car Loan) = $2,300 + $400 + $100 + $400 = $3,200. Annual TDS = ($3,200 * 12) / $90,000 = $38,400 / $90,000 = 0.42666... or 42.67%.