Humber/Ontario Real Estate Course 2 Exam Practice

If a buyer earns $90,000 annually and their PIT payments are $25,200, what is the GDS ratio?

1. 0.28%

2. 30%

3. 28%

4. 32%

5. 3.57%

6. 25%

The correct answer is: 28%

The correct answer is C: 28%. To calculate the Gross Debt Service (GDS) ratio, you divide the total annual PIT payments by the buyer's annual income and then multiply by 100 to get the percentage. In this case, the buyer's annual income is $90,000 and their total annual PIT payments are $25,200. $25,200 (total annual PIT payments) / $90,000 (buyer's annual income) = 0.28 To convert this to a percentage, you multiply by 100, resulting in 28%. This means that the GDS ratio for this buyer is 28%, which indicates what percentage of their income is being used to cover housing costs.