Humber/Ontario Real Estate Course 2 Exam Practice

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How is the Gross Debt Service (GDS) ratio calculated when a buyer's income is $55,000 and their monthly PIT payment is $1,434?

  1. 9.5%

  2. 29.4%

  3. 31.3%

  4. 32%

  5. 8.7%

  6. 30.2%

The correct answer is: 29.4%

The Gross Debt Service (GDS) ratio is calculated by taking the total annual housing costs and dividing it by the buyer's annual income. In this case, the monthly PIT (Principal, Interest, and Taxes) payment of $1,434 would amount to $1,434 x 12 = $17,208 annually. To find the GDS ratio, divide the annual housing costs ($17,208) by the buyer's annual income ($55,000) and multiply by 100 to get a percentage: ($17,208 / $55,000) x 100 = 31.3% Therefore, the correct answer is C. 31.3%.

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