Response time and rankings ?

I was wondering how the response times of my websites will affect my rankings in google ?
I figured: bad response times = lower ranking. Right ?
My websites are aimed at the US market mainly.

My current hosting setup is like this:

VPS hosting in the Netherlands + DNS hosted in Netherlands (different firm).
Response times within the Netherlands: 35ms or below
Response times in US: 180ms or below.

Is this considered good in general, in terms of google rankings ?

If this considered too slow, I might get myself a VPS hosted in the USA like this:
option 1: DNS hosted in Netherlands + VPS hosted in the US
option 2: DNS hosted in US + VPS hosted in the US.
Which option would you choose ?

Use hosting for your targeted audience, also use cloud flare and if you can host static files like css or images on google drive(best free cdn)

Ice: thanks for your reply, but it is just remotely related to my questions.

I think you're over complicating things here. Yes, it is well documented that poor response times will result in poor rankings. Google actually provides us with a page speed test, so we can see where our websites are failing in terms of response time. Here is the link to that tool:

https://developers.google.com/speed/pagespeed/insights/

Run it for your main domain and see what errors it gives off for both mobile and desktop.

Normally, cleaning up messy javascript, minifying your CSS, optimizing your images, and adding your site to a CDN will be enough to give yourself a little boost in rankings.

You will find your answer here - http://moz.com/blog/how-website-speed-actually-impacts-search-ranking

Use a CDN like cloudflare to get better response times and check if the compression of your website is enabled.

The last three responders: thanks !

I recommend that you use a host that's in the country you're trying to rank