What is TDSR and Why It Matters for Your Mortgage
The Total Debt Servicing Ratio (TDSR) is a critical metric that determines how much you can borrow for a home loan in Singapore. Banks use TDSR to assess whether you can afford your monthly mortgage payments alongside your existing financial obligations. Simply put, your TDSR is the percentage of your gross monthly income that goes towards servicing all your debts—including your new mortgage, car loans, credit card payments, and other outstanding loans.
Singapore's Monetary Authority (MAS) has set a maximum TDSR limit of 55% for most borrowers. This means your total monthly debt payments cannot exceed 55% of your gross monthly income. For HDB and Executive Condominium (EC) purchases, there's an additional constraint: the Mortgage Servicing Ratio (MSR) is capped at 30%, meaning your mortgage payment alone cannot exceed 30% of your gross income.
Understanding TDSR is essential because it directly impacts your borrowing capacity and mortgage approval chances. A lower TDSR gives you more flexibility to borrow, while a higher TDSR may limit your options or result in loan rejection. This is why many first-time buyers and property investors use Homejourney's mortgage eligibility calculator to understand their exact borrowing power before beginning their property search.
How TDSR is Calculated: A Step-by-Step Breakdown
Calculating your TDSR involves three key components: your gross monthly income, your existing monthly debt obligations, and your proposed mortgage payment. Let's break this down with a practical example.
Step 1: Determine Your Gross Monthly Income
Your gross monthly income is your total earnings before taxes and deductions. For employed individuals, this is straightforward—it's your monthly salary. For self-employed individuals or those with variable income, banks typically average your income over the past 2-3 years or use your most recent year's income, whichever is lower. Freelancers and business owners should prepare their latest tax returns and financial statements to support their income claims.
Step 2: Calculate Your Existing Monthly Debt Obligations
Next, add up all your existing monthly debt payments. This includes:
- Car loan instalments
- Personal loan payments
- Credit card outstanding balances (banks typically use 5% of your credit limit as the minimum monthly payment)
- Student loans or education financing
- Hire-purchase agreements
- Any other outstanding loans or financial obligations
Banks pull this information from the Credit Bureau Singapore (CBS) to verify your existing obligations. This is why maintaining a clean credit history is crucial for mortgage approval.
Step 3: Add Your Proposed Mortgage Payment
Calculate your estimated monthly mortgage payment based on the loan amount, interest rate, and tenure you're considering. Most banks use a reference rate (typically 3.5% or higher) for calculation purposes, even if current rates are lower. This provides a buffer to ensure you can afford payments if rates increase.
Step 4: Apply the TDSR Formula
The TDSR calculation is straightforward:
TDSR = (Total Monthly Debt Obligations + Proposed Mortgage Payment) ÷ Gross Monthly Income × 100%
Example Calculation:
Let's say you earn SGD 6,000 gross monthly income with existing debt obligations of SGD 800 per month (car loan and credit card). You're planning to borrow SGD 400,000 for a property at an assumed interest rate of 3.5% over 25 years, which results in a monthly mortgage payment of approximately SGD 1,900.
Your TDSR would be: (SGD 800 + SGD 1,900) ÷ SGD 6,000 × 100% = 45%
This is well below the 55% limit, so you'd likely be approved. However, if your existing debts were SGD 1,500 instead, your TDSR would be 55%, hitting the maximum limit and potentially affecting your approval chances.
Rather than doing these calculations manually, Homejourney's mortgage eligibility calculator instantly computes your TDSR and shows you exactly how much you can borrow. Simply input your income, existing debts, and desired loan tenure, and the tool provides your maximum borrowing capacity across different banks.
The 55% TDSR Limit: What You Need to Know
The 55% TDSR limit is a regulatory guideline set by Singapore's Monetary Authority to protect borrowers from over-leveraging. This limit applies to most residential property purchases, whether you're buying an HDB flat, condominium, or landed property.
However, the 55% limit isn't absolute. Certain borrowers may qualify for exceptions:
- Young first-time buyers (age 21-25): May receive a higher TDSR allowance of up to 60% for their first property purchase
- Borrowers with strong financial profiles: Some banks offer flexibility for customers with excellent credit histories and substantial savings
- Co-borrowers: Adding a co-borrower (spouse, parent, or adult child) increases your combined income and can significantly improve your TDSR ratio
It's important to note that even if a bank is willing to lend beyond the 55% threshold, it doesn't mean you should borrow at maximum capacity. Financial advisors typically recommend keeping your TDSR between 30-40% to maintain financial flexibility for emergencies and other life expenses.
TDSR vs. MSR: Understanding the Difference
While TDSR considers all your debts, the Mortgage Servicing Ratio (MSR) focuses specifically on your mortgage payment. For HDB flats and Executive Condominiums, the MSR is capped at 30%, meaning your monthly mortgage payment alone cannot exceed 30% of your gross monthly income.
Using the earlier example with SGD 6,000 gross income:
- MSR limit: SGD 6,000 × 30% = SGD 1,800 maximum monthly mortgage payment
- TDSR limit: SGD 6,000 × 55% = SGD 3,300 maximum for all debts combined
This means even if your TDSR allows you to borrow more, the MSR constraint may limit your borrowing capacity for HDB properties. Private property purchases don't have an MSR limit, only the 55% TDSR applies.
How to Improve Your TDSR and Increase Borrowing Power
If your current TDSR limits your borrowing capacity, there are several practical steps you can take to improve your financial profile and qualify for a larger loan.
1. Pay Down Existing Debts
The most direct way to improve your TDSR is to reduce your existing monthly debt obligations. Prioritize paying off high-interest debts like credit card balances and personal loans. Even reducing your outstanding credit card balance by SGD 5,000 can lower your monthly obligations by SGD 250-300, improving your TDSR by 4-5 percentage points.
2. Increase Your Income
If you're employed, requesting a salary increase or seeking a higher-paying position directly improves your borrowing capacity. Self-employed individuals should focus on growing their business revenue, as banks base lending decisions on your documented income. Allow at least 12 months of consistent higher income before applying for a mortgage, as banks want to see stability.
3. Add a Co-Borrower
Including a spouse, parent, or adult child as a co-borrower combines your incomes, significantly improving your TDSR. For example, if your spouse earns SGD 5,000 monthly, your combined income becomes SGD 11,000, allowing you to borrow substantially more. Co-borrowers are jointly liable for the loan, so ensure all parties understand this commitment.
4. Extend Your Loan Tenure
Increasing your loan tenure from 25 years to 30 years reduces your monthly mortgage payment, improving your TDSR. However, you'll pay significantly more interest over the life of the loan, so balance this carefully with your long-term financial goals.
5. Wait for Income Growth
If you're early in your career, waiting 1-2 years for salary increments and promotions can substantially improve your borrowing capacity. This is particularly relevant for young professionals in their 20s and early 30s whose salaries typically grow over time.
6. Improve Your Credit Score
While TDSR is the primary factor, your credit score influences interest rates and approval chances. Pay all bills on time, keep credit card utilization below 30%, and avoid taking on new debts before applying for a mortgage. A higher credit score may qualify you for better interest rates, reducing your effective monthly mortgage payment.
Why Applying via Homejourney Simplifies Your Mortgage Journey
Understanding TDSR is one thing; navigating the actual mortgage application process across multiple banks is another. This is where Homejourney's integrated platform makes a significant difference for Singapore homebuyers.
Instant Eligibility Assessment
Homejourney's mortgage eligibility calculator provides instant feedback on your borrowing capacity based on your income and existing debts. Unlike traditional methods where you'd need to visit multiple bank branches or fill out lengthy forms, Homejourney's tool gives you results in minutes. This helps you understand your budget before you even start your property search, saving time and preventing disappointment when you fall in love with a property outside your means.
Compare Bank Rates in One Place
Rather than visiting individual banks or calling multiple loan officers, Homejourney's bank rates page displays current mortgage rates from DBS, OCBC, UOB, HSBC, Standard Chartered, Maybank, CIMB, RHB Bank, and other major lenders. You can instantly see which banks offer the most competitive rates for your profile, potentially saving thousands of dollars in interest over your loan tenure.
Single Application, Multiple Offers
Homejourney's streamlined application process allows you to submit a single mortgage application that reaches multiple banks simultaneously. Rather than filling out separate forms for each bank—a time-consuming process that can take weeks—you complete one application via Homejourney's platform. Banks then compete for your business, often resulting in better rates and terms. This competitive process works in your favor as a borrower.
Singpass Integration for Faster Approval
Homejourney integrates with Singapore's Singpass system, allowing your income and employment data to auto-fill your application in seconds. This eliminates manual data entry errors and accelerates the approval process. Your application reaches banks with verified information, reducing back-and-forth clarifications and speeding up the lending decision.
Transparent, Verified Information
Homejourney's commitment to user safety means all lenders on the platform are verified and regulated. You're not dealing with unlicensed intermediaries or predatory lending practices. The platform provides transparent information about rates, fees, and terms, ensuring you understand exactly what you're signing up for. This aligns with Homejourney's core value of building trust through transparency.
Expert Guidance Throughout Your Journey
Beyond the calculator and rate comparison, Homejourney's mortgage brokers provide personalized guidance based on your specific situation. Whether you're a first-time buyer confused about TDSR, a property investor comparing refinancing options, or an HDB upgrader navigating MSR constraints, expert support is available to help you make informed decisions.
Real-World Scenarios: How TDSR Affects Different Borrowers
Scenario 1: First-Time Buyer with Minimal Debt
Sarah, age 28, earns SGD 5,500 monthly with no existing debts. She wants to purchase a SGD 450,000 HDB flat with a 25-year mortgage at 3.5%.
- Monthly mortgage payment: ~SGD 2,030
- TDSR: SGD 2,030 ÷ SGD 5,500 = 36.9%
- MSR: SGD 2,030 ÷ SGD 5,500 = 36.9% (exceeds 30% MSR limit)
Sarah's TDSR is healthy, but she exceeds the MSR limit for HDB properties. She could extend her tenure to 30 years (reducing monthly payment to ~SGD 1,900, bringing MSR to 34.5%), add a co-borrower, or reduce her loan amount. Using Homejourney's calculator, she can instantly see these trade-offs and plan accordingly.
Scenario 2: Mid-Career Professional with Existing Debts
Marcus, age 35, earns SGD 8,000 monthly with SGD 1,200 in existing monthly debt obligations (car loan and credit card). He wants to purchase a SGD 600,000 condominium with a 25-year mortgage at 3.5%.
- Monthly mortgage payment: ~SGD 2,700
- TDSR: (SGD 1,200 + SGD 2,700) ÷ SGD 8,000 = 49.9%
Marcus is comfortably below the 55% limit and would likely be approved. However, by paying down his car loan (3 years remaining), he could reduce his TDSR to 33.75%, giving him more financial breathing room and potentially qualifying for better interest rates due to his improved financial profile.
Scenario 3: Couple with Combined Income
David and Emma, both age 32, earn SGD 6,500 and SGD 5,500 respectively (combined SGD 12,000). They have combined existing debts of SGD 1,500 monthly. They want to purchase a SGD 800,000 condominium with a 25-year mortgage at 3.5%.
- Monthly mortgage payment: ~SGD 3,600
