TDSR is the single biggest reason a bank's actual loan offer disappoints buyers who ran their own numbers first. It is not one number, it is a stack of conservative assumptions.
How the 55% cap works
Total Debt Servicing Ratio caps all your monthly debt obligations, car loans, credit card minimums, other mortgages, and the new home loan instalment, at 55% of gross monthly income. This is a Monetary Authority of Singapore rule and applies to every bank home loan.
The 4% stress test rate
Even though actual mortgage rates in 2026 run around 1.5% per annum for typical bank packages, banks compute your maximum loan quantum using a stress test rate of 4% per annum, or the actual rate if it is higher. Your approved loan is sized against this higher hypothetical instalment, not what you will actually pay.
Variable income haircut
Commission, bonus, and rental income are typically included at only 70% of their value, a 30% haircut, in the TDSR calculation, because they are considered less certain than fixed salary.
MSR for HDB and EC
For HDB flats and Executive Condominiums, there is a second, tighter cap: Mortgage Servicing Ratio (MSR) limits just the housing instalment to 30% of gross monthly income, on top of the 55% TDSR ceiling.
Worked example
On S$10,000 gross monthly income with no other debt, the 55% TDSR ceiling allows up to S$5,500 a month toward the new mortgage instalment. Stress tested at 4% per annum over a 25 year tenure, that services a loan quantum of roughly S$1.04 million, illustrative only; your bank's actual offer depends on your full debt profile and the property type.
Common follow up questions
Does overseas or foreign income get a bigger TDSR haircut than local income?
Yes, if the income itself is foreign sourced. Most Singapore banks apply a 20% haircut to overseas employment income, some go to 30%, on top of the ordinary 30% haircut already applied to commission, bonus and rental income. A Singapore employed co borrower, recognised at 100%, can meaningfully offset this and raise the approved loan quantum.
How much lower is my approved loan due to the 4% stress test rate compared to today's actual rate?
Banks size your loan using the 4% per annum stress test rate, not the roughly 1.5% per annum rate typical bank packages actually charge in 2026. Because your maximum quantum is calculated against that much higher hypothetical instalment, the approved amount is materially smaller than what your real monthly repayment would suggest you could afford.
Does MSR apply if I am buying a private condo, not HDB or EC?
No. Mortgage Servicing Ratio only applies to HDB flats and Executive Condominiums, capping the housing instalment at 30% of gross monthly income on top of the 55% TDSR ceiling. A private condominium or landed home purchase is assessed under TDSR alone, with no separate MSR cap.
Frequently asked questions
Does TDSR apply to HDB loans too?
TDSR applies when you take a bank loan, including a bank loan for an HDB flat. If you use HDB's own concessionary loan instead, HDB assesses your eligibility through the HDB Flat Eligibility (HFE) letter process, a different but parallel affordability check.
Why did the bank offer me less than I expected?
Usually the 4% stress test rate and the 30% haircut on variable income. If part of your income is commission, bonus, or rental, only 70% of it counts toward the 55% TDSR ceiling, which shrinks your approved loan compared with your take home pay.
Not sure what you can actually borrow?
Winfred runs your real TDSR and MSR numbers, with your actual debt and income mix, before you fall for a listing you can't finance.
Book a free 30 minute callWinfred Quek is an Associate Marketing Consultant at Crestbrick Pte Ltd (CEA Licence No. L31010886H). CEA R073319H. This page is for general information only and does not constitute financial, investment, or legal advice. Rates and rules reflect the position as at 5 Aug 2026; verify current figures with IRAS, HDB, or MAS before making any decision.