Finmo has colour coded the GDS (Gross Debt Service) and TDS (Total Debt Service) ratios to enhance your underwriting process by providing clear visual cues that help you make faster and more accurate financial decisions. Watch a short video below.
What are GDS and TDS?
GDS (Gross Debt Service): This ratio represents the percentage of a borrower's gross income that goes towards housing costs, including mortgage payments, property taxes, and heating expenses.
TDS (Total Debt Service): This ratio includes all debt obligations, housing costs and other debt payments, as a percentage of gross income.
What do the colours represent?
The colour-coded indicators for GDS and TDS ratios in Finmo are as follows:
Green: Indicates that the ratios are within a range that most lenders are comfortable with under normal circumstances.
Yellow: Lenders may be cautious and not accept these ratios if the borrower has a low credit score or presents other risks.
Red: The ratios are too high to qualify for an insured mortgage, but the lender may still approve the submission if the borrower has a down payment of 20% or more and meets specific criteria.
Example of how to use the colour code indicators
Red:
In the example of Roger and Jessica's deal, the GDS is at 41.039%, which is highlighted in red.
Red Range: GDS > 39%, TDS > 44%
Action: This visual cue indicates a high-risk scenario, prompting a review before proceeding.
Yellow:
By increasing the down payment to $1,000,000, the GDS changes to yellow.
Yellow Range: 35% ≤ GDS ≤ 39%
Action: Indicates a medium-risk scenario where lenders might require additional factors such as a good credit score.
Green :
Increasing the down payment to $1,200,000 changes the GDS to green.
Green Range: GDS < 35%, TDS < 42%
Action: This visual cue signifies a lower risk, making it more likely for the deal to be accepted by lenders.
For further assistance feel free to reach out to our support team via the chat bubble in Finmo or via support@finmo.ca.