Which financing ratio considers all monthly obligations to an applicant's income?

The Total Debt Service Ratio is a critical measure in real estate financing, as it assesses the proportion of an applicant's gross income that goes toward servicing all debt obligations. This ratio includes not only the mortgage payments but also other monthly debts such as credit card payments, car loans, and any other personal loans. By considering these total obligations in relation to income, lenders can better gauge an applicant's financial health and ability to manage additional debt.

While other ratios like the Gross Debt Service Ratio focus solely on housing-related expenses (such as mortgage payments and property taxes), the Total Debt Service Ratio provides a more comprehensive perspective by factoring in all contractual monthly obligations. This is essential for understanding the overall financial picture of the borrower, making it a vital tool for lenders in evaluating credit risk.