TDS stands for "total debt service."

A borrower's TDS ratio equals his/her total monthly obligations divided by total gross monthly income. In other words, it's the percentage of income needed to cover all debt payments.

Prime lenders commonly underwrite mortgage applications by assessing a borrower's TDS ratio. Typically, lenders want to see TDS ratios below 44%.

In some cases, non-prime lenders allow TDS ratios up to 60%, or sometimes higher if the borrower has solid credit and sufficient equity (down payment).

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