Pay Dirt Series – GDS and TDS in MIC Deals

Do MICs require GDS/TDS ratios?

The answer is yes and no.

Most MICs don’t have hard and fast rules about GDS/TDS, but that doesn’t mean we don’t examine the borrower’s ability to pay.  While the bank’s rules are quite black and white, ours are more nuanced.

As a MIC we make a more subjective analysis of the borrower’s ability to pay.  We look at things like:

  • Consistent income from non-traditional sources (family members, trusts, overseas etc)
  • Income that doesn’t get T4ed such as foreign student housing
  • The industry that the borrowers work in
  • The likelihood that the borrower’s income will continue
  • Whether the income stated is reasonable for the job they do
  • Whether their real income is sufficient to provide a decent quality of life and still leave enough to make the mortgage payments.

As a broker dealing with a MIC file, it’s most effective to replace GDS/TDS comments with a narrative about the borrower’s financial situation and how they’ll be able to make payments without having to win the lottery.