Total Debt Service Ratio - TDS


Total Debt Service Ratio - TDS
A debt service measure that financial lenders use as a rule of thumb to give a preliminary assessment of whether a potential borrower is already in too much debt. More specifically, this ratio shows the proportion of gross income that is already spent on housing-related and other similar payments.

Receiving a ratio of less than 40% means that the potential borrower has an acceptable level of debt.

Total Debt Service Ratio (TDS)

For example, Jack and Jill, two law students, have a monthly mortgage payment of $1,000 (annual payment of $12,000), property taxes of $3,000, credit card balances totaling $1,000 and a gross family income of $45,000. This would give a TDS of around 36%. Based on the benchmark of 40%, Jack and Jill appear to be carrying an acceptable amount of debt.

This ratio is very similar to the gross debt service ratio (GDS) except that the GDS does not account for non-housing related payments. TDS allows for a slightly more detailed view of a potential borrower's financial situation.


Investment dictionary. . 2012.

Look at other dictionaries:

  • debt coverage ratio — UK US noun [C] (ABBREVIATION DCR, also debt service coverage ratio, also debt service ratio) ► FINANCE a measurement used to decide whether a person, company, or country can afford to pay back a loan, calculated by dividing the income that is… …   Financial and business terms

  • Debt service coverage ratio — The debt service coverage ratio (DSCR), also known as debt coverage ratio, is the ratio of cash available for debt servicing to interest, principal and lease payments. It is a popular benchmark used in the measurement of an entity s (person or… …   Wikipedia

  • ratio — the proportional relationship of one thing to another * * * ratio ra‧ti‧o [ˈreɪʆiəʊ ǁ ˈreɪʆoʊ] noun [countable] a relationship between two amounts that is represented by a pair of numbers showing how much greater one amount is than the other: •… …   Financial and business terms

  • Debt relief — is the partial or total forgiveness of debt, or the slowing or stopping of debt growth, owed by individuals, corporations, or nations. From antiquity through the 19th century, it refers to domestic debts, in particular agricultural debts and… …   Wikipedia

  • Debt-to-GDP ratio — Government debt as percentage of GDP globally. (2009 estimates) …   Wikipedia

  • Debt of developing countries — The debt of developing countries is external debt incurred by governments of developing countries, generally in quantities beyond the governments political ability to repay. Unpayable debt is a term used to describe external debt when the… …   Wikipedia

  • Total Housing Expense — The sum of a homeowner s monthly mortgage principal and interest payments, hazard insurance premiums, property taxes and homeowner s association fees, plus monthly debt service. Monthly debt service consists of payments on credit cards,… …   Investment dictionary

  • Debt — For other uses, see Debt (disambiguation). Personal finance Credit and debt Pawnbroker Student loan Employment contract …   Wikipedia

  • Ratio financier — En comptabilité, un ratio est un rapport calculé entre deux masses fonctionnelles du bilan et/ou du compte de résultat. Il se traduit par un pourcentage ou un coefficient. Il existe plus de cent ratios permettant de formuler une opinion motivée… …   Wikipédia en Français

  • Financial ratio — Corporate finance …   Wikipedia

  • fixed-charge coverage ratio — A measure of a firm s ability to meet its fixed charge obligations: the ratio of (Earnings before interest, depreciation and amortization minus unfunded capital expenditures and distributions) divided by total debt service (annual principal and… …   Financial and business terms


Share the article and excerpts

Direct link
Do a right-click on the link above
and select “Copy Link”

We are using cookies for the best presentation of our site. Continuing to use this site, you agree with this.