John and Emily, both employed, are applying for a mortgage to purchase a home in Vancouver for $950,000. Their combined gross annual income is $150,000. Their current monthly expenses include a $400 car loan payment and a $250 credit card minimum payment. The estimated monthly property taxes are $400, and heating costs are $150. Based on a qualifying rate of 7.00% and a 25-year amortization, the principal and interest (P&I) payment is $5,900. What is their Total Debt Service (TDS) ratio?

Question: John and Emily, both employed, are applying for a mortgage to purchase a home in Vancouver for $950,000. Their combined gross annual income is $150,000. Their current monthly expenses include a $400 car loan payment and a $250 credit card minimum payment. The estimated monthly property taxes are $400, and heating costs are $150. Based on a qualifying rate of 7.00% and a 25-year amortization, the principal and interest (P&I) payment is $5,900. What is their Total Debt Service (TDS) ratio?

Answer options:

• 42%
• 39% ✅ 45%
• 48%

Correct answer: 45%

Explanation: TDS is calculated as (P&I + Property Taxes + Heating + 50% of Condo Fees + Other Debts) / Gross Monthly Income. In this scenario: ($5,900 + $400 + $150 + $400 + $250) / ($150,000 / 12) = $7,100 / $12,500 = 0.568 or 56.8%. Wait, TDS limit for uninsured mortgage is 42%.