It’s rare to pay for your first house in total cash. It’s rare, but it does happen for some. So, for the rest of us Muggles who must slog to pay off mortgages, have you ever wondered how much you can borrow for your house? Generally, the housing landscape here is guided by two debt servicing calculations: TDSR & MSR. The total debt servicing ratio (TDSR) refers to the portion of a borrower’s gross monthly income to repay the monthly debt obligations, including the loan being applied for.
A borrower’s TDSR should be less than or equal to 60%. To calculate a borrower’s TDSR, you may use the following formula: (Borrower’s total monthly debt obligations / Borrower’s gross monthly income) x 100% Monthly debt includes all outstanding debt obligations, including Property-related loans (including the loan being applied for), Car loans, Student loans, Renovation loans, Credit card loans, as well as any other secured or unsecured loans, including revolving loans.
Let’s use a test case example: Mr. & Mrs. Tan wants to purchase private property. Their combined household income is S$20,00,0, and their total monthly debt obligations amount to $5,000. TDSR: 5,000 / 20,000 x 100% = 25% (≤60%) ✅ Next, we have the MSR. Mortgage servicing ratio (MSR) refers to the portion of a borrower’s gross monthly income that goes towards repaying all property loans**, including the loan being applied for.
**It applies only to housing loans for purchasing an HDB flat or an executive condominium where the minimum occupation period of the executive condominium has not expired. The MSR is capped at 30% of the Borrower’s monthly income.
To calculate a borrower’s MSR, use the following formula: (Monthly repayment installments for all property loans / Gross Monthly Income) x 100% ≤ 30%
Let’s use a test case example: Mr. & Mrs. Lee wants to purchase a new EC. Their combined household income is S$15,000, monthly property loan installments are $3,000, and total monthly debt obligations are $5,000. MSR: 3,000 / 15,000 x 100% = 20% (≤30%) ✅ TDSR: 5,000 / 20,000 x 100% = 25% (≤60%) ✅
For mortgage advice, email mortgage@loanonline.sg or drop us at +65 8300 2255.
References: https://www.mas.gov.sg/regulation/explainers/new-housing-loans/msr-and-tdsr-rules https://www.mas.gov.sg/regulation/explainers/tdsr-for-property-loans/calculating-tdsr
