To improve your approval chances for a home loan in Singapore, you must first meet key income requirement home loan rules (TDSR and, for HDB/EC, MSR), then strategically strengthen your income profile, reduce existing debts, and apply through a trusted multi-bank platform like Homejourney that helps you optimise your application and compare offers safely.[5][1]
This focused guide zooms in on Income Requirements for Home Loans: How to Improve Approval Chances, a core subtopic of Homejourney’s main mortgage eligibility pillar guide Income Requirements for Home Loans in Singapore | Homejourney Guide . If you want the full, end-to-end overview of Singapore home loan rules, grants, and loan types, read that pillar after this article.
Key Income Rules Banks Use to Assess Your Home Loan
In Singapore, banks and finance companies must follow Monetary Authority of Singapore (MAS) rules when assessing income eligibility for mortgages.[5] The two most important concepts are:
- Total Debt Servicing Ratio (TDSR): Your total monthly debt repayments (including the new mortgage) cannot exceed 55% of your gross monthly income.[1][5]
- Mortgage Servicing Ratio (MSR): For HDB flats and new Executive Condominiums (ECs), your monthly mortgage instalment cannot exceed 30% of your gross monthly income.[5][8]
These calculations include not only your salary but also how stable it is, whether you are employed or self-employed, and how much other debt (car loan, credit cards, personal loans, education loans) you currently carry.[1][3]
From my experience accompanying buyers at showflats in Tampines and Queenstown, many are surprised that a comfortable income on paper can still fail TDSR because of car loans or multiple credit cards taken a few years earlier. Understanding these ratios early makes a huge difference.
How Banks Count Your Income (Fixed, Variable, Self-Employed)
To improve your minimum salary for mortgage profile, you need to know how banks actually calculate it.
1. Fixed salary employees
- 100% of your basic monthly salary is usually recognised.[1][3]
- Regular fixed allowances (e.g. transport, fixed monthly allowance) may be fully or partially recognised.
- Banks typically look at your last 3–12 months’ payslips and CPF contribution history.
Example: If you work in Raffles Place with a basic salary of $5,000 and a fixed transport allowance of $300, banks will usually treat your recognised income as about $5,300/month, subject to their internal policy.
2. Variable income mortgage (commissions, bonuses, allowances)
For variable components like sales commissions, year-end bonuses, and rental income, banks follow MAS guidance and commonly apply a 30% haircut.[1][3]
- Only about 70% of variable income typically counts towards TDSR.[1][3]
- Most banks average your last 6–12 months of variable income to smooth out spikes.[1]
Example: A property agent or insurance adviser based in Toa Payoh Hub earning an average of $6,000/month in commissions would typically have only $4,200 (70%) recognised for TDSR calculations.
3. Self-employed mortgage and freelancers
For self-employed, gig workers or business owners (e.g. hawker stall at Bedok, online sellers, Grab drivers), banks usually require:
- Last 2 years of IRAS Notice of Assessment (NOA) to verify trade income.[1][3]
- Only around 70% of your average trade income is recognised: Gross monthly income = (Trade income ÷ 12) × 70%.[1][3]
If your last two NOAs show $72,000 and $84,000 in trade income (average $78,000/year), your gross monthly income is $6,500. After the 30% haircut, banks recognise about $4,550/month for TDSR.[1]
Insider tip: In practice, I’ve seen self-employed buyers in areas like Eunos and Geylang Serai face slower processing because their income fluctuates. Submitting complete NOAs, business registration documents, and 6–12 months of bank statements up front helps underwriters gain confidence and speeds up approval.
TDSR & MSR: How They Limit Your Loan Amount
Understanding how TDSR and MSR work is crucial for boosting your approval chances and avoiding disappointment when you find a unit you love in Bishan or Punggol.
Total Debt Servicing Ratio (TDSR)
TDSR is calculated as:[5]
(Monthly debt repayments + proposed home loan instalment) ÷ Gross monthly income × 100% ≤ 55%.
Debt repayments include:
- Car loans
- Personal loans
- Education loans
- Credit card debt (based on minimum payment, usually lower of 3% of outstanding or $50)[3]
- Other property loans
Mortgage Servicing Ratio (MSR)
MSR only applies to loans for HDB flats and new ECs.[5][8] It is:
Monthly home loan instalment ÷ Gross monthly income × 100% ≤ 30%.
This means even if you pass TDSR, you can still be rejected for an HDB/EC loan if your mortgage alone exceeds 30% of income.[5][8]
Interest Rates, SORA and Income Eligibility
When banks test your income eligibility, they don’t just use current rates; they apply a stress-test rate (often higher than today’s SORA or fixed rate) to ensure you can still pay if rates rise.[1][5] This directly affects how much income you need.
Homejourney tracks live SORA and bank promotional rates across DBS, OCBC, UOB, HSBC, Standard Chartered, Maybank, CIMB, RHB, and more via our bank rates comparison tool Bank Rates . This lets you see how rate changes affect your income requirement home loan calculations in real time.
The chart below shows recent interest rate trends in Singapore:
As rate volatility has eased compared to 2022–2023, some banks have gradually lowered their internal stress-test rates, which can modestly improve your effective loan eligibility.[1] Always confirm current practice with your adviser, as MAS guidance and bank risk policies can change.
Step-by-Step: How to Improve Your Home Loan Approval Chances
Here is a practical, Singapore-focused process to increase your approval odds, whether you’re buying a BTO in Tengah or a resale condo in Pasir Ris.
Step 1: Calculate your borrowing power safely
- Use Homejourney’s mortgage eligibility calculator Mortgage Rates to estimate your borrowing limit based on income, age, and existing debts.
- Check both TDSR and, if you are buying HDB or an EC, MSR to ensure you meet both limits.[5][8]
- Test different scenarios: add/remove car loan, adjust loan tenure, change from fixed to floating to see how it affects approval.
Pro tip: When I run through numbers with young couples staying with parents in Yishun, we always simulate a “stress scenario” with rates 1–1.5% higher. If they still qualify and feel comfortable, they can proceed with more confidence.
Step 2: Reduce existing debts at least 3–6 months before applying
Since TDSR caps all monthly debt repayments at 55% of income, reducing other debts is one of the fastest ways to improve approval chances.[1][3]
- Clear or reduce credit card balances (banks use minimum payment in TDSR).[3]
- Avoid taking new personal loans for renovation or weddings until your home loan is approved.
- Consider settling or restructuring car loans if they heavily impact TDSR.
Insider observation: It’s common to see buyers in Sengkang and Punggol who bought a car during COVID now struggle with TDSR for an upgrade to a bigger flat. Paying down or selling the car can sometimes be the difference between a $700k and $900k loan.
