When it comes to buying property in Singapore, most people focus on location, price, and the type of property they want. What tends to get overlooked a lot is the fact that the Total Debt Servicing Ratio (TDSR) determines whether a prospective home buyer can actually borrow enough to finance their dream home.
The TDSR is not just another financial jargon. It serves as a gatekeeper that decides whether banks will approve your home loan application. Introduced with aims to prevent households from taking on unsustainable debt, the TDSR ensures that property buyers remain financially stable even during uncertain economic times.
This quick and simple guide will give you a quick crash course on what the TDSR is, why it matters, and how to plan your finances smartly with platforms like Moneysmart.
What is the Total Debt Servicing Ratio (TDSR)?
The TDSR is a regulation introduced by the Monetary Authority of Singapore (MAS) in 2013 with the intended purpose of preventing homeowners from borrowing beyond their means.
With the TDSR framework in place, no more than 55% of your gross monthly income can go towards debt repayments including mortgage repayments, car loans, credit card debt, personal loans, renovation loans, and even student loans.
By capping debt obligations, the rule ensures that you still have enough disposable income to handle everyday expenses and even tide through unforeseen circumstances.
Why Was the TDSR Introduced?
Before the TDSR framework was implemented, many Singaporeans were stretching themselves thin with multiple loans and even using short-term credit to cover property payments. This created a financial risk for both households and the wider economy.
As such, the TDSR was designed to encourage responsible borrowing, reduce the risk of a property market bubble, and to ensure financial stability during downturns such as rising interest rates and unemployment.
TLDR: the TDSR protects buyers from overcommitting while also safeguarding Singapore’s financial infrastructure.
How TDSR Affects Home Loan Eligibility
Imagine you earn S$8,000 a month. Based on TDSR, the maximum total debt you can service is 55% of $8,000 = $4,400 per month.
If you already have a car loan of S$800 and a personal loan repayment of S$500, that leaves $4,400 – $800 – $500 = $3,100 per month available for your mortgage.
This calculation directly determines the size of your approved home loan. Here are some scenarios to help you better understand how the TDSR impacts home loan eligibility.
| Scenario | Household Income | Existing Debt | Max Debt Allowed Under TDSR | Amount Available for Housing Mortgage | Effect on Loan |
| Young couple with combined income of $12,000 | $12,000 combined | No existing debt | 55% of $12,000 = $6,600 | $6,600 | With no existing obligations, the couple can comfortably take a larger loan. |
| Upgrader with multiple loans | $10,000 | – Car loan repayment $1,000 – Credit card debt $500 |
55% 0f $10,000 = $5,500 | $5,500 – $1,000 – $500 = $4,000 | Existing loans reduce borrowing power, potentially lowering the price of a property they can afford. |
| High earner with student loans | $15,000 | – Student loan repayment $1,200 – Personal loan repayment $800 |
55% of $15,000 = $8,250 | $8,250 – $1,200 – $800 = $6,250 | Despite having a high income, multiple obligations chip away at mortgage eligibility. |
TDSR vs MSR: What’s the Difference?
It is not uncommon for home buyers to confuse the TDSR with the Mortgage Servicing Ratio (MSR). Here’s how they differ:
- TDSR applies to all property types such as HDB flats, condos, landed property, etc. and covers all debt obligations.
- MSR applies only to HDB flats and ECs and limits your mortgage repayments to 30% of your gross monthly income.
As such, if you’re buying a private condo, only the TDSR applies. However, if you decide to get either a BTO or resale HDB instead, both the MSR and TDSR will be factored into your loan eligibility.
Common Myths About TDSR Debunked
❌ “TDSR only affects first-time home buyers.”
→ Wrong. TDSR applies to all property loans, including refinancing.
❌ “High income earners don’t need to worry about TDSR.”
→ Not true. Even with a high income, multiple loans can eat into your borrowing power.
❌ “Banks can bend the rules.”
→ MAS regulations are strict. Banks cannot waive TDSR requirements.
Using a TDSR Calculator
Instead of manually working out the numbers, you can use tools like Moneysmart’s TDSR calculator to help you calculate your TDSR. Simply input your income, outstanding debts, and interest rates to get an instant estimate of your borrowing capacity.
Do this before you go property shopping or speak to any banks to efficiently shortlist properties within your budget and test out “what-if” scenarios such as repaying your car loan early to see how much you can cope financially before committing to a new home loan.
How to Improve Your TDSR Standing
If you find your TDSR drawing you back from getting your desired home loan after doing your calculations, here are steps you can consider to boost your mortgage eligibility:
- Pay off existing debts (especially high-interest loans like credit cards).
- Avoid taking on new loans before making your property purchase.
- Consider joint applications with your spouse to boost household income.
- Opt for longer loan tenures to reduce monthly repayments.
- Build a stronger credit profile (banks look at repayment history when evaluating risk).
Plan Before Borrowing
To many, the TDSR framework may seem like a barrier to borrowing but its real intention is to act as a safeguard to ensure you don’t take on more debt than you can handle. As such, it is crucial for those looking to make their next property purchase to plan ahead, reduce debt where possible, and run your numbers before committing.
For those who fumble with large numbers, platforms like Moneysmart make this process simple. With their free TDSR calculator, you can quickly see how much loan you qualify for, compare different home loan packages, and make financially sound decisions.
Curious about how much you can actually borrow? Try the free TDSR calculator on Moneysmart before starting your house hunting.
TDSR FAQs
Q: Does TDSR apply to HDB loans?
Yes, but alongside MSR (30% cap for HDB/EC buyers).
Q: Is TDSR fixed forever?
No, MAS may adjust the percentage based on market conditions.
Q: Does TDSR apply when refinancing?
Yes, unless refinancing into a loan of lower quantum or interest rate (to reduce financial burden).
Q: Can CPF usage affect TDSR?
No — TDSR considers only your monthly debt repayments, not CPF usage.
