TDSR Explained: How It Affects Your Mortgage Eligibility in Singapore

TDSR Explained: How It Affects Your Mortgage Eligibility in Singapore

The Total Debt Servicing Ratio (TDSR) is the single most important factor determining how much you can borrow for a home in Singapore. This structural lending rule, introduced by the Monetary Authority of Singapore (MAS) in 2013, caps all your monthly debt payments—including mortgages, car loans, and credit cards—at 55% of your gross monthly income. Understanding TDSR calculation and how it impacts your mortgage eligibility is essential for every property buyer and investor in Singapore.

At Homejourney, we believe transparency and verification are fundamental to building trust in property transactions. This comprehensive guide explains TDSR in detail, provides real-world calculation examples, and shows you exactly how to maximize your borrowing power while maintaining financial responsibility.

Executive Summary: TDSR at a Glance

TDSR is a regulatory measure that cannot be removed or negotiated—it applies uniformly across all banks and all borrowers in Singapore. Unlike the Mortgage Servicing Ratio (MSR), which applies only to HDB and Executive Condominium mortgages, TDSR covers all residential properties and all types of debt. The 55% threshold means that if you earn S$10,000 per month, your total monthly debt obligations cannot exceed S$5,500. This single rule determines whether you qualify for a mortgage and how much you can borrow.

The impact of TDSR on your mortgage eligibility is substantial. Many first-time buyers discover they can borrow significantly less than they expected once TDSR is calculated. In 2026, with cooling measures tightening LTV ratios and maintaining TDSR thresholds, understanding this rule has become even more critical for accurate financial planning.

Table of Contents

• What Is TDSR and Why Does It Matter?
• How TDSR Calculation Works: Step-by-Step
• TDSR vs MSR: Key Differences for HDB Buyers
• Calculating Your Gross Monthly Income for TDSR
• Understanding Total Monthly Debt Obligations
• Real-World TDSR Examples: Income vs Borrowing Power
• Interest Rate Stress Testing: The 4% Rule
• How to Improve Your TDSR Eligibility
• TDSR in 2026: New Cooling Measures Impact
• Using Homejourney to Calculate Your TDSR
• Frequently Asked Questions
• Next Steps: Your Path to Mortgage Approval

What Is TDSR and Why Does It Matter?

The Total Debt Servicing Ratio (TDSR) is a regulatory lending metric that limits your total monthly debt payments to a maximum of 55% of your gross monthly income. This means if you earn S$10,000 per month, your total monthly debt obligations—including your new mortgage payment, existing car loans, credit card payments, and any other debts—cannot exceed S$5,500.

TDSR was introduced by MAS in 2013 as a macroprudential measure to prevent over-borrowing and cool rapid property price growth. Given Singapore's high property prices and the significant role real estate plays in household wealth, TDSR has become a critical safeguard against excessive leverage. The rule applies uniformly to all borrowers and all residential properties, making it the most important eligibility criterion for mortgage approval.

Why does TDSR matter so much? Because it directly determines your maximum borrowing capacity. Even if you have excellent credit and stable employment, exceeding the 55% TDSR threshold results in automatic mortgage rejection from all Singapore banks. This is not a guideline or a soft limit—it is a hard regulatory requirement that banks cannot override.

At Homejourney, we prioritize user safety by helping you understand TDSR before you fall in love with a property. Our mortgage eligibility calculator uses Singpass integration to auto-fill your income data, providing accurate TDSR assessments instantly. This transparency prevents the disappointment of mortgage rejection after you've committed emotionally to a property.

How TDSR Calculation Works: Step-by-Step

TDSR calculation is straightforward in principle but requires careful attention to detail in practice. The formula is:

TDSR = (Total Monthly Debt Obligations ÷ Gross Monthly Income) × 100

Your TDSR must be ≤55% to qualify for a mortgage. Let's break down each component:

Step 1: Calculate Your Gross Monthly Income

Gross monthly income includes your pre-tax salary but excludes employer CPF contributions. For salaried employees, this is straightforward. However, if you have variable income from bonuses, commissions, or other sources, banks apply a 30% haircut to this amount and average it over the past 12 months.

Example: If your base salary is S$8,000 and you received S$2,000 in bonuses last year, your variable income is S$2,000 × 0.70 = S$1,400. Your total gross monthly income for TDSR purposes is S$8,000 + (S$1,400 ÷ 12) = S$8,117.

For self-employed individuals, banks typically require 2 years of audited accounts and calculate average monthly income from these accounts. Freelancers and gig workers face stricter scrutiny and may need to provide additional documentation of income stability.

Step 2: Identify All Monthly Debt Obligations

Total monthly debt obligations include every debt payment you make each month. This encompasses:

• Existing mortgage payments (if refinancing or upgrading)
• Car loan payments
• Personal loan payments
• Credit card minimum payments (banks typically use 5% of outstanding balance)
• Student loans
• New mortgage payment you're applying for

Banks are thorough in identifying debt obligations. They will pull your Credit Bureau Singapore report to verify all existing debts. If you have credit card balances, they calculate monthly obligations as 5% of the outstanding balance, even if you pay in full each month.

Step 3: Apply the TDSR Formula

Once you have your gross monthly income and total monthly debt obligations, apply the formula:

TDSR = (Total Monthly Debt ÷ Gross Monthly Income) × 100

Your result must be ≤55%. If it exceeds 55%, you do not qualify for the mortgage amount you're seeking, and you'll need to either reduce debt, increase income, or lower your property target price.

Example Calculation:

A couple earns S$10,000 combined gross monthly income (S$8,000 fixed + S$2,000 variable, which becomes S$1,400 after haircut = S$9,400 total). They have S$2,000 in existing monthly debt obligations (car loan S$1,000 + credit card S$1,000). They want to buy a property with a new mortgage payment of S$3,000.

Total monthly debt = S$2,000 + S$3,000 = S$5,000
TDSR = (S$5,000 ÷ S$9,400) × 100 = 53.2%

This is below 55%, so they qualify. However, if their new mortgage payment were S$3,500, total debt would be S$5,500, and TDSR would be 58.5%—exceeding the limit and resulting in rejection.

TDSR vs MSR: Key Differences for HDB Buyers

Singapore has two debt servicing ratio rules: TDSR (55% limit) and MSR (30% limit). Understanding the difference is crucial for HDB and Executive Condominium buyers, as both rules apply simultaneously, and you must satisfy the stricter one.

The key difference: TDSR includes all debts, while MSR includes only the mortgage payment. For HDB buyers with no other debts, MSR is often the binding constraint. For private property buyers or those with existing debts, TDSR typically restricts borrowing more severely.

Example: An HDB buyer earns S$6,000 monthly with no existing debts. Under MSR, they can have a mortgage payment up to S$1,800 (30% of S$6,000). Under TDSR, they can have total debt up to S$3,300 (55% of S$6,000). Since their only debt is the mortgage, MSR is the binding constraint, limiting them to S$1,800 monthly payment.

However, if this same buyer has a car loan of S$500 monthly, their TDSR calculation changes. Total debt can be S$3,300, so mortgage payment can be S$2,800 (S$3,300 - S$500). But MSR still limits mortgage to S$1,800. Now MSR is binding, and the car loan doesn't increase their borrowing capacity.

Use Homejourney's mortgage calculator at Bank Rates to check both TDSR and MSR simultaneously. Our calculator instantly shows which rule constrains your borrowing and how much you can actually borrow under 2026 regulations.

Calculating Your Gross Monthly Income for TDSR

Accurate income calculation is foundational to TDSR assessment. Banks use specific rules for different income types, and understanding these rules helps you prepare documentation correctly.

Salaried Employees

For salaried employees, gross monthly income is straightforward: your pre-tax salary, excluding employer CPF. If you receive a regular annual bonus (paid reliably each year), banks will include this in your gross income calculation. The bonus is averaged over 12 months and typically subject to a 30% haircut for conservatism.

Documentation required: Recent payslips (typically last 3 months), employment letter, and CPF statement.

Variable Income (Bonuses, Commissions, Allowances)

Variable income is any income that fluctuates month to month. Banks apply a 30% haircut to variable income and average it over the past 12 months. This haircut reflects income volatility and ensures borrowers can service debt even if variable income declines.

Example: If you received S$5,000 in total commissions over the past 12 months, your monthly variable income is S$5,000 ÷ 12 = S$417. After the 30% haircut: S$417 × 0.70 = S$292 per month.

Documentation required: Last 12 months of payslips showing variable components, employment letter confirming commission structure, and tax returns.

Self-Employed and Business Owners

Self-employed individuals face stricter income verification. Banks typically require 2 years of audited financial statements or tax returns to assess average monthly income. Some banks may require 3 years of accounts for newer businesses. Income is calculated as average monthly profit over the period reviewed.

Business expenses are deducted from revenue to calculate net income, which is then divided by 12 to determine monthly income for TDSR purposes. Banks may apply additional haircuts if business income is volatile or declining.

Documentation required: 2 years of audited accounts, 2 years of tax returns, business registration documents, and bank statements.

Co-Borrowers and Joint Income

If you're buying with a spouse or co-borrower, banks combine your gross monthly incomes for TDSR calculation. This is particularly beneficial if one borrower has lower income or existing debts, as the combined income pool increases borrowing capacity.

However, if one co-borrower has significant existing debts, those debts count toward the combined TDSR calculation. Strategic structuring of co-borrower relationships can sometimes improve overall eligibility.

Example: Husband earns S$8,000 monthly with S$1,000 car loan. Wife earns S$6,000 monthly with no debts. Combined gross income is S$14,000. Combined existing debt is S$1,000. Maximum total debt under TDSR is S$7,700 (55% of S$14,000). Available for new mortgage is S$7,700 - S$1,000 = S$6,700 monthly payment capacity.

Understanding Total Monthly Debt Obligations

Banks take a comprehensive view of your debt obligations. Every recurring monthly payment counts toward your TDSR calculation, and banks will verify all debts through your Credit Bureau Singapore report.

Debts That Count Toward TDSR

• Mortgage payments: Your new mortgage payment is included in TDSR calculation. Banks use a 4% interest rate stress test (explained below), not your actual rate, to calculate this payment.
• Car loans: Full monthly payment counts, regardless of how much is principal vs interest.
• Personal loans: Full monthly payment counts.
• Credit card obligations: Banks calculate this as 5% of your outstanding balance, even if you pay in full monthly. A S$10,000 credit card balance counts as S$500 monthly debt.
• Student loans: Monthly repayment amount counts.
• Hire purchase agreements: Monthly payment counts.

Debts That Don't Count Toward TDSR

• Utility bills: Electricity, water, internet don't count.
• Insurance premiums: Life, car, home insurance don't count.
• Rent or housing costs: If you're currently renting, rent payments don't count (but your new mortgage will).
• CPF contributions: Already deducted from gross income calculation.

The Credit Card Trap

Many borrowers overlook credit card debt in TDSR calculations. If you carry a S$20,000 balance across multiple cards, banks count this as S$1,000 monthly debt (5% of balance). This can significantly reduce your borrowing capacity.

Strategy: Before applying for a mortgage, pay down high-balance credit cards. Even if you pay in full monthly, the outstanding balance affects your TDSR. Clearing S$20,000 in credit card debt increases your borrowing capacity by approximately S$200,000 (at 4% stress rate over 25 years).

Real-World TDSR Examples: Income vs Borrowing Power

Let's walk through several realistic scenarios to show how TDSR affects actual borrowing capacity in Singapore's 2026 property market.

Scenario 1: Single First-Time Buyer, No Existing Debt

Profile: 32-year-old single buyer, S$6,000 monthly salary, no existing debts, buying a private property.

TDSR Calculation:
Gross monthly income: S$6,000
Maximum total debt (55%): S$3,300
Existing debt: S$0
Available for new mortgage: S$3,300

Borrowing Capacity: At a 4% interest rate over 25 years, a S$3,300 monthly payment supports a mortgage of approximately S$580,000. With a 75% LTV (current private property limit), this borrower can purchase a property worth approximately S$773,000.

Key insight: This buyer's borrowing capacity is limited by TDSR, not by income level. Even with perfect credit and stable employment, they cannot borrow more than S$580,000 due to the 55% TDSR cap.

Scenario 2: Married Couple, One with Car Loan

Profile: Couple (husband S$8,000, wife S$7,000 monthly), husband has S$1,200 car loan, buying HDB flat.

TDSR Calculation:
Combined gross monthly income: S$15,000
Maximum total debt (55%): S$8,250
Existing debt: S$1,200
Available for new mortgage: S$7,050

MSR Calculation (for HDB):
Maximum mortgage payment (30%): S$4,500
MSR is the binding constraint, limiting mortgage to S$4,500 monthly.

Borrowing Capacity: At 4% over 25 years, S$4,500 monthly payment supports approximately S$795,000 mortgage. With 75% LTV (2026 HDB limit), they can purchase an HDB flat worth approximately S$1,060,000.

Key insight: For HDB buyers, MSR often constrains borrowing more than TDSR. The couple's TDSR allows S$7,050 mortgage payment, but MSR limits them to S$4,500.

Scenario 3: High Earner with Multiple Debts

Profile: 45-year-old single buyer, S$15,000 monthly salary, S$2,000 car loan + S$500 credit card debt, buying private property.

TDSR Calculation:
Gross monthly income: S$15,000
Maximum total debt (55%): S$8,250
Existing debt: S$2,500
Available for new mortgage: S$5,750

Borrowing Capacity: At 4% over 25 years, S$5,750 monthly payment supports approximately S$1,015,000 mortgage. With 75% LTV, they can purchase a property worth approximately S$1,353,000.

Key insight: Despite earning S$15,000 monthly, the existing S$2,500 debt reduces borrowing capacity by approximately S$440,000. Paying off the car loan and credit card before applying for a mortgage would increase borrowing capacity to approximately S$1,455,000.

Borrowing Capacity Table

Note: These calculations assume no existing debts and use a 4% stress test rate over 25-year tenure. Actual borrowing capacity may vary based on bank policies, LTV limits, and individual circumstances. Use Homejourney's calculator at Bank Rates for personalized assessment.

Interest Rate Stress Testing: The 4% Rule

One of the most important aspects of TDSR that borrowers misunderstand is the interest rate stress test. Banks don't calculate your mortgage payment based on current interest rates. Instead, they use a standardized 4% interest rate for all TDSR calculations, regardless of whether current rates are higher or lower.

Why Banks Use Stress Testing

The 4% stress test exists to ensure you can afford your mortgage even if interest rates rise significantly. Singapore's benchmark rates (SORA and fixed rates) fluctuate based on global economic conditions. By using a 4% floor for calculations, banks ensure borrowers can service debt during high-rate environments.

This is conservative lending practice. If current rates are 2.5%, banks still calculate your payment as if rates were 4%. This provides a safety margin and protects both borrowers and lenders from rate shock.

How Stress Testing Affects Your Borrowing

Example: You want to borrow S$1,000,000 at current rates of 2.5% over 25 years. Your actual monthly payment would be approximately S$3,950. However, for TDSR calculation, banks use 4%, making your monthly payment approximately S$4,775. This S$825 difference significantly impacts your TDSR ratio.

If your gross income is S$10,000 and you have no other debts, your TDSR would be 47.75% (S$4,775 ÷ S$10,000) at the stress-tested rate. You qualify comfortably. But if rates actually rise to 4%, your payment matches the stress test, and you're still within TDSR limits.

This is why understanding stress testing is crucial: your actual monthly payment may be lower than the stress-tested amount, but banks use the higher amount for qualification purposes. This conservative approach protects your financial stability.

How to Improve Your TDSR Eligibility

If your TDSR calculation shows you're close to or exceeding the 55% limit, several strategies can improve your eligibility and increase your borrowing capacity.

Strategy 1: Pay Down Existing Debt

This is the most direct way to improve TDSR. Every S$100 of monthly debt you eliminate increases your available mortgage capacity by approximately S$18,000 (at 4% over 25 years).

Priority order for debt payoff:

1. Credit cards: Highest impact due to the 5% calculation rule. Paying off S$20,000 in credit card debt saves S$1,000 monthly debt obligation.
2. Personal loans: Direct monthly payment reduction.
3. Car loans: Significant monthly obligation, but consider timing—if the loan ends naturally soon, you might wait.

Timing consideration: Pay down debt at least 3-6 months before applying for a mortgage. This allows the reduced debt to appear on your Credit Bureau report and gives banks confidence in your improved financial position.

Strategy 2: Increase Your Income

A salary increase or promotion directly improves TDSR eligibility. A S$1,000 monthly income increase raises your maximum debt capacity by S$550 (55% of the increase).

For salaried employees: Document the salary increase with an updated employment letter and payslip. Banks typically require the new salary to be in effect for at least one month before it counts toward TDSR.

For variable income: Bonuses and commissions are valuable but subject to the 30% haircut. A S$10,000 annual bonus adds only S$583 to your monthly income (S$10,000 ÷ 12 × 0.70). However, over time, consistent bonuses strengthen your income documentation.

Strategy 3: Add a Co-Borrower

Bringing a spouse or family member into the mortgage as a co-borrower combines your incomes, dramatically improving TDSR eligibility—provided the co-borrower has minimal existing debt.

Example: Single buyer earning S$8,000 with S$1,500 car loan has S$2,900 available for mortgage (55% of S$8,000 minus S$1,500). Adding a spouse earning S$7,000 with no debt increases combined income to S$15,000 and combined debt to S$1,500, allowing S$6,750 for new mortgage—more than double the original capacity.

Caution: If the co-borrower has significant existing debt, they may not improve overall capacity. Carefully calculate combined TDSR before adding a co-borrower.

Strategy 4: Extend Loan Tenure

While not directly improving TDSR, extending your loan tenure from 25 to 30 years reduces monthly payments, which improves your TDSR ratio. However, this increases total interest paid, so carefully weigh the trade-off.

Example: A S$1,000,000 loan at 4% costs S$4,775 monthly over 25 years. Over 30 years, it costs S$4,774 monthly—nearly identical. The benefit of extending tenure diminishes at higher ages due to bank tenure limits (typically age 65-70 at loan end).

Strategy 5: Lower Your Property Target Price

If TDSR limits your borrowing capacity below your property target, lowering your target price aligns your goals with your financial reality. This is often the most prudent approach for first-time buyers.

Rather than stretching to the absolute maximum TDSR limit, consider borrowing 40-45% of your income. This provides financial flexibility for unexpected expenses, rate increases, and life changes.

TDSR in 2026: New Cooling Measures Impact

In 2026, Singapore's property market continues to operate under cooling measures that tighten borrowing capacity. While TDSR itself remains at 55%, the interaction between TDSR and other regulations creates a more restrictive lending environment.

The Dual Constraint: LTV + TDSR