If William's Gross Debt Service Ratio is calculated at 23.4%, what does this represent?

The Gross Debt Service Ratio (GDS) is a critical metric used primarily in mortgage lending to assess a borrower's ability to manage their monthly housing costs. When William's GDS is calculated at 23.4%, it signifies that 23.4% of his gross income is allocated towards his housing expenses.

Housing costs typically included in this calculation are the mortgage payments (principal and interest), property taxes, heating costs, and 50% of condo fees, if applicable. Lenders use this ratio to determine whether an individual can comfortably cover their home-related expenses without overextending their finances. A lower GDS typically indicates a better balance between income and housing costs, which is favorable for loan approval.

In contrast, the other choices address different aspects not directly related to the GDS. Total debt refers to all debt obligations, rental income relates to income earned from renting out property rather than expenses, and investments cover the allocation of income towards non-housing financial activities. Thus, only the correct answer focuses specifically on housing costs as represented by the GDS.