Before a bank approves your home loan in Singapore, it runs one critical check: your Total Debt Servicing Ratio, or TDSR. Understanding how TDSR works — and how to calculate yours — can save you from a disappointing rejection and help you plan your purchase more accurately.

What Is TDSR?

TDSR is a framework introduced by the Monetary Authority of Singapore (MAS) in 2013 to ensure borrowers don't overstretch themselves. It sets a hard cap: your total monthly debt obligations cannot exceed 55% of your gross monthly income.

This applies to all property loans in Singapore, including HDB flats, private condominiums, and landed property.

What Counts as Debt?

TDSR includes all your monthly debt repayments, not just the mortgage you're applying for:

  • The new home loan instalment
  • Any existing home loans (e.g. investment property)
  • Car loan repayments
  • Personal loan repayments
  • Student loan repayments
  • Credit card minimum payments (typically 5% of outstanding balance)
  • Other hire-purchase instalments

How to Calculate Your TDSR

The formula is straightforward:

TDSR = Total Monthly Debt Obligations ÷ Gross Monthly Income × 100%

Example

Suppose you earn S$8,000 per month gross and have the following debts:

  • New home loan instalment: S$3,200/mo
  • Car loan: S$800/mo
  • Credit card minimum payment: S$150/mo

Total monthly debt = S$4,150

TDSR = S$4,150 ÷ S$8,000 = 51.9% ✓ (below the 55% cap)

If the home loan instalment were S$3,500 instead, TDSR would be 55.6% — and the loan would be declined.

How Banks Calculate the Loan Instalment for TDSR

Banks don't use your actual contracted interest rate for the TDSR calculation. They use a stress-test rate — currently a minimum of 4.0% p.a. for property loans. This is to ensure you can still service the loan if rates rise.

This means even if your actual mortgage rate is 3.5%, the bank will calculate your TDSR instalment as if you're paying 4.0%.

What Counts as Income?

Banks typically accept:

  • Fixed income: 100% of basic salary (with payslips or CPF contribution history)
  • Variable income: Commissions, bonuses — typically 70% of the average over 12 months
  • Self-employed / freelance: Usually 70% of assessed income from Notice of Assessment
  • Rental income: Typically 70% of gross rental

If you are buying with a co-borrower (e.g. spouse), both incomes can be combined.

TDSR vs MSR: What's the Difference?

For HDB flats, an additional rule applies: the Mortgage Servicing Ratio (MSR), capped at 30% of gross monthly income. MSR covers only the home loan being taken for the HDB flat (not other debts).

In practice, MSR is often the binding constraint for HDB buyers, not TDSR.

How to Improve Your TDSR

  • Pay down existing debt before applying — especially high-instalment loans like car loans.
  • Clear credit card balances to reduce minimum payment obligations.
  • Add a co-borrower to increase the income base.
  • Choose a longer loan tenure to reduce the monthly instalment (up to 30 years for private property, 25 years for HDB).
  • Sell existing investment properties if their loans are dragging down your TDSR.

Key Takeaways

  • TDSR caps total monthly debt at 55% of gross monthly income.
  • Banks stress-test at 4.0% p.a., not your actual mortgage rate.
  • HDB buyers face an additional MSR cap of 30%.
  • Reducing existing debts before applying is the most effective way to increase your borrowing capacity.
  • Use a mortgage calculator to estimate your instalment, then check if it fits within your TDSR.