Humber/Ontario Real Estate Course 2 Exam Practice

What is the GDS ratio if Buyer Asadi has a monthly PIT payment of $1,800 and an annual income of $67,000?

1. 12.1%

2. 32.2%

3. 28.8%

4. 22.5%

5. 44.6%

6. 35.5%

The correct answer is: 32.2%

The GDS (Gross Debt Service) ratio is a formula used by lenders to calculate the percentage of a borrower's gross income needed to cover all housing expenses. In this case, the formula for GDS ratio is (Monthly PIT payment / Monthly Gross Income) x 100. Given that Buyer Asadi has a monthly PIT payment of $1,800 and an annual income of $67,000, we first need to convert the annual income to monthly income by dividing $67,000 by 12 (months) to get $5,583.33. Then, we can plug in the values into the formula: (1,800 / 5,583.33) x 100 ≈ 32.2% Therefore, the GDS ratio for Buyer Asadi is 32.2%, making choice B the correct answer.