The Monetary Authority of Singapore (MAS) caps how much you can borrow against your income through two main ratios: TDSR for all residential loans, and MSR for HDB and EC purchases. These are not negotiation points with the bank — they're regulatory ceilings. Here's exactly how they calculate and what they mean for your buying power.
TDSR: 55% of gross monthly income
Total Debt Servicing Ratio limits your total monthly debt obligations to 55% of gross monthly income. "Total debt" includes:
- The new property mortgage
- Any existing property mortgages
- Car loans
- Renovation loans
- Personal loans
- Education loans
- Credit card minimum payments (banks typically use 5% of outstanding balance)
- Any other unsecured credit facilities
Worked example: gross monthly income SGD 15,000. TDSR ceiling = SGD 8,250/month total debt servicing. If you have a SGD 1,200/month car loan and SGD 300/month credit card minimums, you have SGD 6,750/month available for new mortgage payments.
MSR: 30% of gross monthly income (HDB/EC only)
Mortgage Servicing Ratio applies to HDB flats and Executive Condominiums only. It caps the housing loan instalment alone at 30% of gross monthly income, on top of TDSR.
Same SGD 15,000 income: MSR ceiling = SGD 4,500/month for the HDB/EC mortgage payment. The lower of TDSR and MSR applies. For most HDB and EC buyers, MSR is the binding constraint.
The 4% stress-test rate
This catches everyone the first time. MAS requires banks to compute TDSR using a notional medium-term interest rate, not the rate they're quoting you:
- Private residential loans: 4.0% stress-test rate
- HDB loans: 4.25% stress-test rate (or actual rate, whichever higher)
- Non-residential loans: 5.0% stress-test rate
So if a bank quotes you a SORA-pegged rate of 3.2%, your TDSR is still calculated at 4.0%. The lower current rate doesn't expand your borrowing capacity. This is the mechanism that protects buyers from rate shock.
How banks actually calculate your loan ceiling
The calculation runs like this (simplified):
- Verify your gross monthly income (CPF contributions + bonuses pro-rated, with documentary proof).
- Apply variable income haircut: typically 30% off variable income (bonus, commission) to derive a "haircut" income figure.
- Calculate TDSR ceiling = 55% × haircut income.
- Subtract existing monthly debt servicing.
- Available capacity = TDSR ceiling minus existing debt.
- Maximum loan = capacity that can be serviced at the 4.0% stress-test rate over your chosen tenure.
Example: SGD 15,000 gross monthly income, all fixed salary. TDSR ceiling = SGD 8,250. No existing debt. Maximum loan over 30 years at 4.0% stress-test ≈ SGD 1,730,000.
The LTV cap layered on top
TDSR limits monthly debt service. Loan-to-Value (LTV) limits the loan amount as a percentage of property price.
| Property count | Max LTV (bank loan) | Min cash component |
|---|---|---|
| 1st outstanding loan | 75% | 5% |
| 2nd outstanding loan | 45% | 25% |
| 3rd+ outstanding loan | 35% | 25% |
For HDB loans (not bank loans), the LTV is 75% in 2026 with no cash component required (you can use CPF for the entire down payment).
Variable income and self-employed
The income haircut for self-employed and variable-income buyers is real. Standard treatments:
- Fixed salaried: last 3–6 months of payslips. Bonus typically annualised and 30% haircut applied.
- Commission-based: usually a 30% haircut on commission income, plus minimum 2 years of NOA (Notice of Assessment) required.
- Self-employed: 30% haircut on declared income, typically need 2 years of NOAs to establish baseline.
- Director's fees / dividends: case-by-case; sometimes 50% haircut.
Founders and high-variable earners often find their borrowing capacity is materially lower than their actual cash flow suggests. Plan for this 6–12 months ahead by structuring income appropriately.
The workarounds that aren't really workarounds
Buyers often ask about ways to "extend TDSR." Most don't actually work:
- Longer tenure? Caps apply. Bank loans max out at age 75 for private residential, 65 for HDB. A 35-year-old can get up to 30 years; a 55-year-old only 20 years.
- Joint borrower with no income? Doesn't increase TDSR capacity; the income calculation is on actual income earners.
- Adding non-resident family as guarantor? Banks typically don't accept this for residential. Some private banks offer Lombard-style facilities but with different rate structures.
- Pledging assets to extend? Pledging eligible assets (cash, securities) with the bank can increase TDSR capacity by a multiplier (typically 4x assets pledged / 4 = monthly add-back). Works but locks up capital.
The real way to expand your capacity
- Pay down existing debt first. Clearing a SGD 1,200/month car loan adds SGD 1,200/month back to TDSR capacity, which translates to ~SGD 250k of additional loan capacity over 30 years at 4%.
- Restructure income. If you're self-employed and can stabilise reported income over 2–3 NOAs, you remove the haircut volatility.
- Choose tenure wisely. Maximum tenure = maximum capacity, but you pay more interest. Optimum is usually somewhere in the middle.
- Apply joint with high-income spouse. Adding a spouse with verifiable income directly expands the income base.
- Buy lower. The simplest, most reliable answer. If your TDSR ceiling forces you to buy at SGD 1.5M instead of SGD 2M, that's the market telling you something.
The bottom line
TDSR and MSR exist because Singapore households were over-leveraging during the 2009–2013 cycle, and the cooling measures around financing remain the most durable part of the regulatory stack. The 55% ceiling is generous — it's not designed to limit prudent buyers, only to stop over-extension. If you're hitting the cap, that's information, not a problem to solve creatively.
For a personalised affordability check on your specific income profile and existing debt, use the mortgage calculator or request a consultation.