To calculate the CMHC Ratio:
\[ R = \left(\frac{H}{I}\right) \times 100 \]
Where:
The CMHC ratio, or Gross Debt Service (GDS) ratio, measures the percentage of a borrower’s gross monthly income that goes towards housing-related expenses. This includes mortgage payments, property taxes, heating costs, and a portion of condominium fees (if applicable). A lower CMHC ratio indicates better financial health and a higher likelihood of mortgage approval.
Let's assume the following values:
Step 1: Use the formula:
\[ R = \left(\frac{1500}{5000}\right) \times 100 = 30 \]
Step 2: Display the result:
The CMHC Ratio (R) is 30.00%.
