What is the typical threshold for the GDS ratio to be considered acceptable?

The Gross Debt Service (GDS) ratio is a crucial metric used in the assessment of an applicant's financial health, particularly in real estate transactions. It represents the percentage of a borrower's gross income that goes towards housing-related expenses, including mortgage payments, property taxes, and heating costs.

An acceptable GDS ratio typically falls around 32%. This figure is commonly used by financial institutions and lenders as a benchmark to determine whether a borrower can reasonably afford the housing costs associated with a property. A GDS ratio of 32% indicates that a borrower is not overly burdened by housing costs relative to their income, promoting the likelihood of timely mortgage payments and reducing the risk of default.

While some variations may exist based on lender policies or specific loan programs, the 32% threshold is widely recognized as the standard for a balanced budget that supports sustainable homeownership.