when applying for a mortgage or any other type of loan all borrowers should be aware that the total debt service tds ratio is a key factor driving approval or rejection and it is just as important as a stable income timely bill payment and a strong credit score 
remember the lower your tds ratio the better your chances of approval borrowers with higher tds ratios are more likely to struggle to meet their debt obligations than borrowers with lower ratios all lenders will compare your tds to their benchmark tds range usually from 36 to no more than 43 before they decide whether you can manage an additional monthly payment on top of all other bills many lenders prefer a ratio of 36 or less for loan approval most do not give mortgages to borrowers with tds ratios that exceed 43 1lenders prefer borrowers with total debt service tds ratios of 36 or less borrowers with tds ratios that exceed 43 are rarely approved for mortgages example of the total debt service tds ratioto see how your tds ratio will be determined just add up monthly debt obligations and divide them by gross monthly income here s a hypothetical example an individual with a gross monthly income of 11 000 and monthly debt obligations of 4 225 2 225 for a mortgage 1 000 for a student loan 350 for a motorcycle loan 650 for a credit card balance divide the total debt obligation of 4 225 by income of 11 000 in the percentage formula below to get a tds ratio of 38 4 which is not much higher than the low benchmark 36 and well below the max 43 this individual would most likely get a mortgage 