Humber/Ontario Real Estate Course 3 Exam Practice

Disable ads (and more) with a membership for a one time $2.99 payment

Prepare for the Humber/Ontario Real Estate Course 3 Exam with our practice quizzes. Study using multiple-choice questions complete with hints and explanations. Ace your exam with confidence!

Each practice test/flash card set has 50 randomly selected questions from a bank of over 500. You'll get a new set of questions each time!

Practice this question and more.

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

Blended debt service ratio.
Interest-only ratio.
Gross debt service ratio.
Total debt service ratio.
Total principal debt ratio.
Adjusted debt ratio.

The correct answer is: Total debt service ratio.

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.