Humber/Ontario Real Estate Course 2 Exam Practice

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Prepare for the Ontario Real Estate Exam with our comprehensive Humber Course 2 Exam Practice quiz. Engage with multiple choice questions and detailed explanations, designed to help you excel.

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What does ‘GDS ratio’ stand for?

Gross Debt Service ratio
General Debt Service ratio
Gross Development Service ratio
Guaranteed Debt Service ratio
General Development Service ratio
Gross Debt Sum ratio

The correct answer is: Gross Debt Service ratio

The correct answer is A. Gross Debt Service ratio. The GDS ratio is a financial metric used by lenders to determine whether a borrower can afford a mortgage. It represents the percentage of the borrower's gross income that is needed to cover all housing-related costs, such as mortgage payments, property taxes, heating expenses, and 50% of condo fees (if applicable). This ratio helps lenders evaluate the borrower's ability to manage their monthly housing expenses. The other options (B. General Debt Service ratio, C. Gross Development Service ratio, D. Guaranteed Debt Service ratio, E. General Development Service ratio, F. Gross Debt Sum ratio) are not the correct terms used in real estate finance to assess a borrower's ability to manage mortgage-related expenses. It is important to be familiar with the correct terminology in order to understand and communicate effectively in the real estate industry.