Before any Singapore bank or HDB will approve your mortgage, two ratios scrutinise your finances: the Total Debt Servicing Ratio (TDSR) and — for HDB loans — the Mortgage Servicing Ratio (MSR). Understanding both is essential before you make an offer on a property.
What Is TDSR?
The Total Debt Servicing Ratio requires that your total monthly debt obligations — including the proposed mortgage — do not exceed 55% of your gross monthly income.
The formula is straightforward:
**TDSR = (All monthly debt obligations ÷ Gross monthly income) × 100**
"All monthly debt obligations" includes your proposed mortgage, car loans, student loans, credit card minimum payments (generally counted at 5% of the outstanding balance), personal loans, and any other regular debt repayments.
"Gross monthly income" for salaried employees is typically the base salary (excluding variable components like bonuses, which are weighted at 30% of the monthly average). For self-employed individuals, lenders typically use 70% of the average monthly net profit from the past two years' tax assessments.
The TDSR was introduced by the Monetary Authority of Singapore in 2013 and has been a cornerstone of Singapore's property cooling framework ever since. It applies to all private residential property loans and to HDB loans financed through banks.
What Is MSR?
The Mortgage Servicing Ratio is a tighter constraint that applies specifically to HDB flat purchases and Executive Condominium purchases from developers.
**MSR = (Monthly mortgage repayment ÷ Gross monthly income) × 100**
The cap is 30%. Note that MSR only counts the mortgage in question — it does not aggregate other debts the way TDSR does. However, for HDB purchases, both MSR (30%) and TDSR (55%) must be satisfied simultaneously.
In practice, the MSR is almost always the binding constraint for HDB buyers because 30% of income is a tighter limit than the 55% TDSR cap after excluding other debts.
The Stress Test Rate
Banks do not calculate your mortgage repayment at the current prevailing rate. The MAS mandates a stress test: your mortgage must be serviceable at a notional interest rate of **4% per annum**, regardless of what the actual rate is today.
This matters considerably. If you are borrowing $1 million over 25 years at an actual rate of 3.2% per annum, your actual monthly repayment is approximately $4,840. But the bank calculates your TDSR/MSR eligibility using a repayment of $5,280 — the figure at 4%.
The stress test ensures that borrowers retain capacity to service their loans if interest rates rise materially.
Worked Example: $10,000 Gross Monthly Income
Assume you earn $10,000 gross per month and want to buy an HDB resale flat with a bank loan. You have a car loan costing $800 per month and one credit card with $5,000 outstanding (counted as $250/month at 5%).
**TDSR calculation:** - Available for mortgage: 55% × $10,000 = $5,500, minus $800 car loan, minus $250 credit card = $4,450 per month at the stress test rate of 4% - That supports a loan of approximately $842,000 over 30 years (or $715,000 over 25 years)
**MSR calculation:** - Available for mortgage: 30% × $10,000 = $3,000 per month at 4% - That supports a loan of approximately $567,000 over 30 years (or $481,000 over 25 years)
In this scenario, the MSR is the binding constraint. The buyer can afford a property priced at roughly $710,000 if they have a 25% down payment of approximately $143,000 (based on $567,000 loan at full LTV).
For a private property purchase (not subject to MSR), the same buyer with only TDSR applies could potentially borrow $715,000–$842,000 depending on loan tenure.
How to Improve Your TDSR
Clear high-cost debt before applying
Credit cards and personal loans count against your TDSR. Clearing $20,000 of credit card debt removes roughly $1,000 from your monthly obligations (counted at 5%) — immediately improving your TDSR position.
Extend the loan tenure
A longer tenure reduces the monthly repayment at the 4% stress test rate, allowing you to borrow more. The maximum for private property is 30 years (or until age 75, whichever comes first). For HDB, the maximum with an HDB loan is 25 years.
Include a co-borrower's income
If your spouse or a family member is willing to be a co-borrower, their income can be added to the denominator. This is the most common approach for young couples who need to combine incomes to qualify for a larger loan.
Increase verifiable income
For business owners and freelancers, lenders typically average two years of tax assessments. A strong recent year that has not yet been filed may not count. Filing promptly and maintaining clean financial records is important.
Time it right
ABSD remissions and cooling measures change periodically. Timing your purchase to coincide with favourable policy settings — or simply when your financial position is strongest — can make a material difference to your eligibility and the terms you receive.
The Bottom Line
TDSR and MSR are not obstacles — they are guardrails that have arguably made Singapore's property market more stable than most developed economies. Borrowers who understand these ratios before viewing properties save themselves the disappointment of falling in love with a unit they cannot finance. Run the numbers before you start your search.
