Gross Debt Service Ratio

What is a gross debt service ratio?

Gross Debt Service Ratio Definition: The gross debt service ratio measures the cost of housing versus a borrower’s total gross income. This ratio is essential in determining how much a homebuyer’s gross income pays for housing costs and whether a buyer can afford a new home or take out a mortgage.

A gross debt service ratio is calculated by dividing the total housing costs by the amount of gross income. Housing costs include taxes, utilities, interest, and principal in this ratio. The total gross income includes the total revenue or income earned before deductions and taxes.

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