When buying a home, it is helpful to determine the type of home you'll like and how much you can afford before beginning your search. Most lenders allocate approximately 32% of your GROSS MONTHLY INCOME to housing expense. Housing expense includes principal, interest, taxes, heat and half condo fees (if applicable). To get an idea of how much you can afford to pay each month for a home, multiply your gross monthly income by 32% or .32. The Gross Debt Seervice (GDS) Ratio that lenders talk about is this 32% amount.

When coupled with current outstanding loans, the total for your debt service (TDS or Total Debt Service) ratio should not exceed 40% of your gross monthly income. Some lenders may have slightly more liberal requirements or loan interest rates which may increase your purchasing power.