For an eligible bank-financed HDB flat or an executive condominium bought directly from a developer, the Mortgage Servicing Ratio (MSR) caps the mortgage payment at 30% of assessed monthly income. The Total Debt Servicing Ratio (TDSR) generally limits total monthly debt payments to 55% of assessed monthly income. Where both apply, the tighter limit can constrain what you borrow.
A household with $8,000 of assessed monthly income and $900 in other monthly debt would have an illustrative $2,400 MSR ceiling and $3,500 left under TDSR. For a purchase where both apply, $2,400 is the tighter monthly figure. The lender still has to assess your income, debts, term, loan-to-value limit and property.
Quick Read
- Identify the loan route and which ratio applies.
- Use income the lender accepts and list existing monthly debts.
- Compare the limits using the assessed mortgage payment.
- Check cash, CPF, valuation and monthly living costs separately.
CHAPTER 1 OF 10
What the two ratios measure
The Mortgage Servicing Ratio focuses on the mortgage payment for the property under the relevant rules. In a simplified screen, divide the assessed monthly mortgage payment by assessed monthly income. The Total Debt Servicing Ratio adds counted monthly debt payments before dividing by income. A car loan or another mortgage can therefore leave less headroom under TDSR even if the new home payment is within the MSR ceiling.
Use assessed figures from the lender. The actual payment quoted for a promotional rate and the payment the lender uses for its affordability assessment may differ. Similarly, the household’s monthly receipts and the income the lender recognises may differ. Put each figure on its own line. That makes it possible to compare the regulatory screen with the monthly budget the family will actually live on.
One mortgage with two results An illustrative household has $8,000 in assessed income, $900 of other monthly debt and a proposed assessed mortgage payment of $2,300. Its simplified MSR is $2,300 divided by $8,000, or 28.75%. Its simplified TDSR is $3,200 divided by $8,000, or 40%. It is within both headline limits in this example. The lender must still check the property, loan and borrower.
Change the mortgage payment to $2,600 and the MSR becomes 32.5%. Total counted payments would be $3,500, or 43.75%. The TDSR still fits the headline limit, while the MSR exceeds 30% where it applies. This is why one good percentage alone does not establish what a household can borrow.
Write the assessed mortgage, other counted debts and total on one sheet and ask the lender how it reached each number. If there are joint borrowers, check whose obligations and income have been included.
CHAPTER 2 OF 10
Match the ratio to the property and loan route
For loans from financial institutions, MAS identifies the 30% MSR for HDB flats and executive condominium units bought directly from developers. The 55% TDSR generally applies to financial-institution property loans under the framework. A private condo purchase is normally assessed under TDSR without that public-housing MSR. Confirm the exact property and route, especially if an executive condominium is being bought on resale.
HDB’s own loan uses its separate eligibility and assessment process. Start with the HFE letter for the actual household and confirm how the amount applies to the flat and its valuation. An approval or indication for a bank loan cannot stand in for the HDB result. An HFE result cannot serve as a bank’s formal offer. If comparing routes, keep the financing documents and timelines in different columns.
A family compares three property types A household looking near Punggol considers a four-room HDB flat, a new EC and a private condo. It asks which lending ratios and eligibility rules apply to each. The EC and the condo may both be financed by banks, but the developer EC can have the additional MSR constraint. The HDB purchase has its own eligibility checks and may offer a different loan route depending on the household.
Compare the actual property category before using the same monthly cap across the three plans. A listing may describe a property as a condo in ordinary language even if its formal category matters for the assessment. Give the lender the address and acquisition route rather than asking in general about an EC.
If you change from a new development to a resale listing, ask whether the assessment changes. Then update the down payment, required documents and dates. A previous indication is useful only while its assumptions match the new transaction.
HDB’s own loan uses a separate assessment
HDB’s concessionary loan page says monthly instalments can be up to 30% of applicants’ monthly income. It also uses the higher of its prevailing housing loan rate and its assessment floor, currently 3% per year, to compute the eligible amount. This is separate from the bank assessment discussed above. Look at the HFE result and the conditions for the specific loan rather than applying the bank’s 55% TDSR formula to work out your HDB loan amount.
When comparing the two routes, record the estimated loan size, payment and cash requirements for each. HDB may show you prudent, moderate and maximum loan amounts. Check how those would translate to a monthly payment and whether the property and loan-to-value rules constrain the amount. The HDB loan illustration and a bank offer can use different assumptions about the household or the loan. Ask what was used before comparing the last line.
CHAPTER 3 OF 10
Calculate a monthly ceiling before discussing a loan amount
A quick screening calculation can start with assessed income multiplied by 30% where MSR applies. For TDSR headroom, multiply assessed income by 55% and subtract counted existing monthly debts. If both limits apply, use the lower monthly amount for the first comparison. These simple figures help frame a conversation with the lender. The lender supplies the official assessment.
For $8,000 of assessed income, 30% is $2,400 and 55% is $4,400. With $900 of counted debt, TDSR headroom is $3,500. With $2,500 of counted debt, it falls to $1,900. The MSR figure stays at $2,400 in both cases. An additional debt can change which screen is tighter without changing the mortgage ratio itself.
Compare two buyers with the same salary One buyer has only a small existing instalment. Another has a car loan and another housing commitment. Both have the same assessed income. The second buyer asks for a breakdown of the debts the bank counts, and how it treats a loan that may be repaid soon. The bank may need evidence that the obligation is actually cleared before changing the assessment.
Do the calculation using the debt figure the lender gives you. If the figure differs from your estimate, ask which commitment you omitted or which monthly amount the lender used. Keep the explanation beside the credit documents. A family comparing several homes should use the same verified debt list for each comparison unless its circumstances actually change.
When the result leaves little headroom, a lower-priced unit or more funding can change the required loan. Check the whole plan before relying on a change that is not yet confirmed.
| Existing monthly debt | 30% MSR ceiling | Headroom under 55% TDSR | Tighter screen where both apply |
|---|---|---|---|
| $0 | $2,400 | $4,400 | $2,400 |
| $900 | $2,400 | $3,500 | $2,400 |
| $2,000 | $2,400 | $2,400 | $2,400 |
| $2,500 | $2,400 | $1,900 | $1,900 |
CHAPTER 4 OF 10
How income and debt records affect the assessment
Gather recent income records for the actual borrowers and tell the lender which parts are fixed, variable or irregular. Ask how it assesses commission, bonuses, self-employed earnings or rental income where applicable. A household should avoid assuming that the strongest recent month is the income the lender will recognise for a long-term loan. Use the official figure when it is available.
List debts and commitments and provide current balances or instalments when requested. This may include car finance, other property loans, credit obligations or personal loans. If you expect to clear a debt, check the date and evidence the lender needs. A planned repayment is a different event from a debt already discharged. Review recurring obligations before taking on another large payment while the purchase is being assessed.
An applicant recently changed jobs The household expects higher income from a new job, but the lender asks for the relevant evidence and takes time to assess it. The household asks what it can count today and what would be needed for another assessment later. It sets a price range using the confirmed position. This helps it decide whether to proceed with a particular Punggol listing or wait.
For two borrowers, confirm that both are included and ask how the lender treats each person’s records and other debts. If one person plans to cut their work hours after moving, put that future income in the household budget even if the current assessment uses a different period. The test for a loan and the long-term payment plan answer different questions.
Put the bank’s assessment date beside the result. If your income or debt changes before completion, ask whether the lender needs updated information and whether it affects the offer.
A smaller assessed income can change which property fits
A household budgets using $8,000 of monthly receipts, but the bank recognises $7,200 for the assessment. With $900 of other counted debt, the illustrative 30% MSR screen is $2,160 and TDSR headroom is $3,060. Compare those with $2,400 and $3,500 when assessed income is $8,000. Ask which income was recognised and what documentation could change it. Use the confirmed amount for the affordability test and the actual take-home money for your household budget. A household may also need to ask how the lender treats commitments that are shared with another borrower.
CHAPTER 5 OF 10
Why the assessed rate can differ from the rate you pay
MAS says banks test housing loan affordability at an interest rate of 4% even when market mortgage rates are lower. The assessment rate helps a bank consider the borrower’s ability to handle higher rates. The interest on your actual instalment follows the loan terms. Ask the bank for the assessment rate and the current payment rate, and check when either figure could be relevant.
The loan amount depends on the repayment period and other conditions as well as the monthly ceiling. At the same assessed payment, a longer period can support a different principal but can also increase the overall cost and affect loan-to-value restrictions. Avoid using a long repayment period simply to match the ceiling without checking the term and the effect of future rate changes.
A simplified payment comparison On a $400,000 loan over 25 years with ordinary monthly amortisation, 3% gives an illustrative payment of about $1,897 and 4% about $2,111, before any charges. The same principal and term give different monthly figures when the rate changes. A bank’s actual calculation and contract can use different conventions. Ask for its payment schedule rather than copying these figures into an offer.
Try a lower loan as well. If the household can pay a smaller principal with confirmed funds while retaining a reserve, it can compare the resulting payment under both the current and higher rate scenarios. If the additional cash would leave too little for moving or repairs, put that trade-off in the plan.
For a floating or step-up package, ask what happens when the introductory terms end. A monthly payment that fits today can become tighter after a reset. Put the contract’s relevant dates beside the monthly budget.
CHAPTER 6 OF 10
Loan-to-value, tenure and valuation are separate screens
Even with comfortable ratios, the loan may be restricted by the loan-to-value limit, valuation, age, outstanding loans or loan tenure. Check the rules applying to your particular financing and property. Ask how the lender uses the agreed price and valuation and how much must be paid from cash or usable CPF. The percentage you can borrow and the monthly amount you can service are separate limits.
For an HDB resale flat, the official value and the agreed price can differ. If the price exceeds the value, the difference has to be planned in cash. The household also needs to check any other cash component, fees and the amount it can actually use from CPF. A loan indication based on the advertised price cannot settle those items before the required value and approval are available.
A home passes the monthly screen but costs more upfront A family considers a $670,000 flat and expects an assessed value around $650,000. It checks what borrowing and CPF can support and plans for the $20,000 above value if those figures materialise. The mortgage might fit the MSR and TDSR, while the upfront amount is still more than the family can comfortably cover. It asks for a price-based and value-based funding breakdown and compares another unit.
Add the option and exercise payments, duty, legal costs and early renovation separately. Ask the conveyancer how the deposit is credited against the price. If the household is using sale proceeds, put the actual availability date on the sheet. A strong monthly assessment does not solve a temporary funding gap.
When buying an older flat, check how the remaining lease affects CPF use or loan options. Give the lender the exact unit and intended buyers. Compare your actual approved funding rather than assuming the same outcome for every four-room flat.
CHAPTER 7 OF 10
Set a personal payment below a stressed budget
Use the ratios to understand the lending ceiling and build a separate household payment limit. Start with predictable income and include food, transport, caregiving, insurance, school costs, service charges, taxes and repairs. Set aside money for a reserve. Test what happens if an income drops, a rate rises or the family needs to pay for repairs in the first year.
Choose realistic scenarios. A household with variable pay can use a lower monthly income case. A family with two borrowers can compare its position if one takes unpaid leave. A homeowner who expects an older unit to need work can include that spending early instead of spreading it through later years on paper. Use the plan that the family can actually follow.
An example with room for a change A household is offered a payment that fits the lender’s tests but would leave only $250 each month after ordinary spending and planned savings. It runs a second example with a higher payment and another with reduced income. The extra cost would remove its room for repairs or medical expenses. It compares a lower loan or a different home rather than assuming the lending ceiling is a spending target.
A family buying near the MRT may save travel costs compared with a cheaper flat farther away. Estimate those costs using the actual daily route and your regular schedules. Put the savings on the household budget rather than on the lender’s income line. This helps you compare homes with different living costs while keeping the loan assessment clear.
Check the monthly payment and upfront costs together. An option that leaves more cash today can involve a higher payment later, and a lower monthly payment can require more upfront funding. Decide which version keeps an adequate reserve.
Use a cash reserve to test your own payment ceiling
Write down the cost of a few realistic disruptions over the first year, such as replacing an appliance or temporarily losing part of an income. Estimate which would need immediate cash and which could wait. A household paying part of its mortgage with CPF should check how long it can continue if contributions fall or its applicable usage limit is reached. Then run the home budget with more cash going to the instalment. The result can help you choose between two price ranges that both pass the lender’s ratios.
CHAPTER 8 OF 10
How an existing home or pending sale changes the plan
If you own another property or have a loan that will be repaid by a sale, give the bank the actual documents and the likely completion date. Ask how it treats the existing commitment in the meantime and what proof it needs to remove it from the calculation. Confirm any other conditions affecting the property purchase. Do not assume an accepted offer for the old property changes the assessment immediately.
Separate the dates when a sale is agreed, when it legally completes, when the mortgage is redeemed and when cash or CPF can be used. They can fall at different points in the move. If buying before selling, ask the lender for a calculation that includes both commitments and identify any additional conditions. Compare that with a sell-first case using verified proceeds.
Compare two sequences on the same worksheet A household plans to sell its existing flat and buy a Punggol replacement. It asks for a bank assessment with the old loan still counted and another based on evidence that the loan has been settled. It also asks when the old sale money will be available for the replacement purchase. The two cases can have different affordability and cash requirements even if the new property price is identical.
If a new loan depends on a particular repayment, keep proof of the settlement. Ask the bank if it needs an updated credit record or a statement from the previous lender. Give yourself time to get the document before the next deadline. A transaction plan that works only if the evidence arrives on the last day can be difficult to manage.
Put any expected interim rent or storage in the move budget. The less expensive loan sequence can involve a longer time between homes, so compare the entire timetable.
CHAPTER 9 OF 10
Use the bank’s written assessment at the right stage
Ask for an In-Principle Approval or other initial indication early enough to guide your viewing. Read the assumptions, expiry and any items the lender has yet to verify. After choosing an HDB resale flat and receiving the required value outcome, ask about conversion to a Letter of Offer. HDB says a buyer taking a financial-institution loan must have the valid offer before exercising the resale option. Keep the funding date alongside the option expiry.
For an HDB loan, use the HFE result and applicable HDB instructions. For a bank loan, check the actual offer and costs before committing. Ask what happens if a borrower, property, price or term changes. A quote for a different unit or price may require reassessment.
A viewing while finance is being assessed A buyer finds a Punggol listing and has an early indication from its bank. It checks whether the indication assumes a particular loan size, income and term. It also checks that HFE is available when required. It estimates cash if the value is lower than the price and tells the seller which dates it can genuinely meet. It checks the formal offer before exercising.
Review the package conditions and disbursement timing with the lender and conveyancer. Ask about the actual monthly payment, review dates, fees and flexibility to repay early. Keep the letter, payment schedule and the property value on file. A household that receives several offers should compare them on the same loan amount and term where possible.
Before relying on a changed offer, check that the earlier option deadline and agreed resale filing dates still work. Update the transaction calendar if the lender’s timeline changes.
CHAPTER 10 OF 10
A mortgage affordability worksheet for the next viewing
Record the flat type, asking and proposed purchase price, valuation assumption and lender route. Put assessed income and counted debt on two lines. Calculate MSR where it applies and TDSR headroom. Then ask the lender for the indicative principal, applicable term, value and cash contribution. Build another version using the actual monthly payment and your household spending rather than the assessed rate alone.
Use separate columns for confirmed and pending figures. A household can already know its regular debts and still be waiting for income assessment or the official value. Keep a lower-value scenario and a higher-payment scenario to test whether the desired unit is realistic. Add a date for when each pending number will be confirmed.
Four questions for the bank Ask which ratios apply, which income was recognised, which monthly debts were counted and which rate and tenure drove the assessed payment. Ask how the result changes if the sale of another property is delayed. If a number seems unclear, request the relevant assumptions instead of comparing only the final loan amount between lenders.
Have everyone contributing to the purchase check the reserve after the deposit, duty and repairs. Check when cash and CPF are available and whose funds they are. Save the final version before agreeing to the transaction. If you choose another property, update the valuation, term and conditions before using the sheet again.
A useful last line is the amount you could pay in an ordinary month and a harder month. Compare it with the actual package payment. That comparison can help you choose between two eligible homes without using the maximum loan as a price target.
Common questions
Do MSR and TDSR apply to an HDB bank loan?
The 30% MSR applies to financial-institution housing loans for HDB flats. The TDSR framework generally applies to bank property loans as well. Ask the lender to identify any applicable exception and assess your actual case.
What about a private condo?
A normal private condo purchase generally uses the bank’s TDSR assessment without the HDB or developer EC MSR. Other loan rules and credit checks still apply.
Does the advertised interest rate decide how much I can borrow?
MAS says banks assess housing affordability at a 4% rate floor even when market rates are lower. Ask your lender what rate it used for the assessment and what rate applies to the actual payments.
Is HDB’s assessment the same as a bank’s?
HDB assesses its concessionary loan through the HFE process using its own rules. Use the HDB result for that route and obtain a separate bank assessment if comparing financial institutions.
Can I count my full bonus or commission?
Give the lender the actual income records. It applies the relevant rules to variable income and may accept less than the gross amount you use in your personal budget.
Is the result a safe monthly budget?
The ratios are lending screens. Build a personal budget that also accounts for household spending, future changes, property charges and a reserve.
What to do next
Ask the lender for assessed income, counted debts, the applicable ratio limits and the loan amount for your property. Then compare the actual payment with a household budget that leaves room for changes.
