What constitutes half of the costs in the GDS calculation if applicable?

In the Gross Debt Service (GDS) ratio calculation, half of certain costs related to homeownership is included to assess the affordability of a mortgage for a borrower. Among these costs, condo fees represent ongoing monthly expenses that a homeowner must consider when budgeting for housing costs. They consist of charges for the maintenance and upkeep of the common areas in a condominium, which can significantly impact the overall financial commitment required to own a condo.

When calculating the GDS ratio, lenders typically use a formula that considers the borrower's total housing costs, which include the mortgage payment, property taxes, heating costs, and, if applicable, condo fees. The inclusion of condo fees in the GDS calculation acknowledges that these fees are a regular financial obligation for condo owners, and understanding this helps both lenders and borrowers determine if the borrower can comfortably afford their total housing expenses relative to their income.

While other costs, such as utilities, property taxes, and insurance premiums, also factor into the overall housing expenses, condo fees play a specific role in the context of properties governed by condominium associations. Thus, in this circumstance, condo fees constitute half of the costs pertinent to the GDS calculation when applicable.