How to Calculate Monthly TDS Payment for Real Estate Mortgage Qualification

Calculating Monthly PI Payment Based on TDS

Here’s an example that may help clarify how to calculate PI payments when a TDS is involved.Anycity Lending Inc. is assessing Buyer Gordon’s financial abilities to buy a resale home for $397,500. The borrower has an annual income of $90,000 with monthly credit card payments of $450. The property’s estimated annual property taxes are $5,600. If the borrower requires a $357,000 mortgage at 4.75%, what is the maximum monthly PI payment that the buyer can qualify for based on the lender’s 40% TDS ratio?


  • First, calculate the maximum total debt payment permitted based on a 40% TDS ratio: $90,000 x .40 = $36,000.
  • Next, annualize the credit card payments: ($450 x 12) = $5,400.
  • Subtract both the annual credit card payments and the annual taxes from $36,000: $36,000 – ($5,400 + 5,600) = $25,000. This represents the maximum annual PI payments, which must be then divided by 12 to arrive at the monthly PI payments: $25,000 ÷ 12 = $2,083.33.

Tip: The sale price and mortgage information are extraneous and not required to arrive at the correct answer.