The Total Debt Servicing Ratio framework was introduced by MAS in June 2013 to prevent households from becoming over-leveraged on property. Before the TDSR, borrowers could theoretically commit most of their income to debt repayments, creating systemic risk when interest rates rose or incomes fell. The 55 percent cap means that across all loans, including a new mortgage, your monthly obligations cannot exceed just over half your gross income. Lenders are legally required to assess and enforce this limit. The stress-test rate of 4 percent ensures that even if your actual mortgage rate is 3 percent today, you qualify at a higher rate so that a future rate increase does not immediately breach the cap.
MSR versus TDSR
The Mortgage Servicing Ratio is a separate and tighter rule that applies specifically to HDB flats and executive condominiums bought directly from developers or HDB. The MSR caps the monthly property loan instalment at 30 percent of gross monthly income. For example, on S$8,000 gross income, the MSR allows a maximum property instalment of S$2,400, even if the TDSR headroom would support more. Both rules can bind simultaneously: the TDSR limits total debt at 55 percent, and the MSR limits the property portion at 30 percent. Private residential property purchases are subject only to TDSR, not MSR.
Strategies to lower your TDSR before applying
If your TDSR is above 55 percent, clearing existing debts is the most direct path. A car loan of S$800 per month uses 10 percent of an S$8,000 income against the cap. Selling the car and clearing the loan before applying for a mortgage frees that 10 percent. Similarly, paying off a personal loan or reducing credit card balances before applying lowers the minimum payments counted in the ratio. Note that the lender includes a notional minimum for credit card balances even if you pay in full each month, so declaring all your cards and their limits honestly is important. Joint applications combine both incomes and all debts, which sometimes improves the ratio if one partner has significantly more income than debt.
Frequently asked questions
What is the TDSR limit in Singapore?
The Total Debt Servicing Ratio cap is 55 percent of gross monthly income for property loans from financial institutions, set by the Monetary Authority of Singapore. This means all your monthly debt repayments combined, including the new mortgage, cannot exceed 55 percent of your gross income. For HDB flats and executive condominiums purchased directly from developers, the Mortgage Servicing Ratio (MSR) adds a tighter 30 percent cap on the property loan instalment alone.
What debts are included in the TDSR calculation?
All secured and unsecured credit obligations count: home loan instalments, car loan instalments, personal loan repayments, student loan repayments, and the minimum monthly repayment on all credit cards. IRAS assesses a notional minimum repayment of at least 5 percent of the outstanding balance per month for credit cards if you do not declare the actual minimum. The lender will also stress-test the mortgage at a higher rate (currently a floor of 4 percent per year) even if your actual rate is lower.
How is gross monthly income defined for TDSR?
Gross monthly income for TDSR purposes typically includes your fixed monthly salary before CPF, as well as variable income averaged over the most recent 12 or 24 months (lenders differ). Rental income is usually haircut by 30 percent. Investment income requires documentation. Self-employed income is assessed from NOA and may be averaged over two years. The lender decides what to accept; this calculator uses the figure you enter as a reference.
Can I get a property loan if my TDSR exceeds 55 percent?
Generally no, for property loans from banks and licensed financial institutions in Singapore. The MAS rules are legally binding on lenders. However, HDB loans from HDB directly are regulated separately and may have different assessment criteria. If you are above 55 percent, you can either increase your income, reduce existing debts before applying, or reduce the loan amount you are seeking. Clearing a car loan or personal loan before applying for a mortgage is a common strategy.