how is gds ratio used 
the gds ratio helps lenders determine whether a borrower can afford a mortgage extending a mortgage loan involves a certain amount of risk to the lender so they want reassurance beforehand that you ll be likely to pay back what you borrow the gds ratio is a way to measure your ability to pay based on estimated housing costs and your household income if a lender determines that your gds is above acceptable limits you have some options the first is finding ways to increase your income for example you may be able to do that by asking for a raise at work taking on more hours starting a second job or starting a side hustle increasing the size of your down payment could also help you qualify for a mortgage if you re financing a smaller loan amount if increasing income or the size of your down payment isn t enough to fall within a lender s acceptable gds limits then you may need to revise your budget to look for a less expensive home special considerationsthe gds ratio is only one component involved in the underwriting process for a loan a borrower s total debt service ratio and credit report are also important components as well a borrower s credit report is obtained from a hard inquiry and provides the lender with the borrower s credit score and credit history many lenders require a borrower to meet specific credit score requirements for loan consideration a borrower s total debt service ratio is also a factor in the qualification process for approval the total debt service ratio is similar to the gross debt service ratio however it includes all of a borrower s debt and is not just focused on housing the total debt service ratio sums up all of a borrower s monthly debt and divides it by their monthly income to calculate a ratio 3 this may also be referred to as the bottom ratio generally lenders require a total debt service ratio of approximately 36 or less for loan approval 