Which of the following is NOT included in the GDS calculation?

The Gross Debt Service (GDS) ratio is a key metric used in the mortgage qualification process to assess a borrower's ability to manage their housing-related expenses. GDS includes various components that reflect the costs associated with home ownership.

The elements that are typically included in the GDS calculation are property taxes, principal and interest payments on the mortgage, and an estimate of heat (utilities) costs. These components represent the core financial obligations a homeowner faces, which lenders use to evaluate whether the borrower can afford the home based on their income.

New credit inquiries, on the other hand, are not directly related to housing costs and thus are not included in the GDS calculation. Credit inquiries pertain to the borrowing history and potential creditworthiness of the borrower but do not have an immediate impact on the recurring monthly housing expenses that the GDS ratio seeks to measure.

Understanding this distinction is crucial as it helps in the assessment of a borrower's financial situation in relation to their housing expenses, ensuring that they can meet their obligations without overextending themselves financially.