Calculate the Gross Debt Service Ratio (GDSR) for a household with a gross income of $100,000, monthly mortgage payments of $2,000, annual property taxes of $5,000, and annual heating costs of $1,440.

Calculate the Gross Debt Service Ratio (GDSR) for a household with a gross income of $100,000, monthly mortgage payments of $2,000, annual property taxes of $5,000, and annual heating costs of $1,440.

• A. 8%.
• B. 30%.
• C. 20%.
• D. 50%.

Answer: (B)

To determine the Gross Debt Service Ratio (GDSR), you first need to calculate the total annual housing-related expenses and then divide that amount by the household's gross income, expressed as a percentage. Here’s how the calculation is done: 1. **Monthly Mortgage Payments**: The household pays $2,000 per month. - Annual mortgage payments: $2,000 x 12 = $24,000. 2. **Annual Property Taxes**: The household pays $5,000 per year. 3. **Annual Heating Costs**: The household incurs $1,440 per year for heating. Next, sum up these annual expenses: - Total annual housing costs = Annual mortgage payments + Annual property taxes + Annual heating costs - Total annual housing costs = $24,000 (mortgage) + $5,000 (property taxes) + $1,440 (heating) = $30,440. Now, to find the Gross Debt Service Ratio, divide the total annual housing costs by the gross income and convert it into percentage form: - GDSR = (Total annual housing costs / Gross income) x 100 - GDSR = ($30,440 / $100,000) x 100

To determine the Gross Debt Service Ratio (GDSR), you first need to calculate the total annual housing-related expenses and then divide that amount by the household's gross income, expressed as a percentage.

Here’s how the calculation is done:

1. Monthly Mortgage Payments: The household pays $2,000 per month.

• Annual mortgage payments: $2,000 x 12 = $24,000.

2. Annual Property Taxes: The household pays $5,000 per year.

3. Annual Heating Costs: The household incurs $1,440 per year for heating.

Next, sum up these annual expenses:

• Total annual housing costs = Annual mortgage payments + Annual property taxes + Annual heating costs

• Total annual housing costs = $24,000 (mortgage) + $5,000 (property taxes) + $1,440 (heating) = $30,440.

Now, to find the Gross Debt Service Ratio, divide the total annual housing costs by the gross income and convert it into percentage form:

• GDSR = (Total annual housing costs / Gross income) x 100

• GDSR = ($30,440 / $100,000) x 100