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TDSR and MSR Explained: Can You Afford That Property?

Before a bank in Singapore approves a property loan, your application has to pass the Total Debt Servicing Ratio test, and for an HDB flat or a new executive condominium, the Mortgage Servicing Ratio test as well. Both are set by MAS. Understanding how they are calculated before you make an offer can save you from committing to a property you cannot finance.

What Is TDSR?

Under the MAS MSR and TDSR rules, a borrower's TDSR should be less than or equal to 55%. TDSR compares all of your monthly debt obligations, including the new property loan, existing home loans, car loans, personal loans and other credit facilities, with your gross monthly income.

TDSR = total monthly debt obligations divided by gross monthly income, which must be 55% or below.

MAS requires financial institutions such as banks, finance companies and merchant banks to calculate TDSR for property loan applicants, so the test applies to bank loans for both HDB flats and private property.

What Is MSR?

MSR is a stricter, narrower test. MAS states that MSR is capped at 30% of a borrower's gross monthly income, and that it applies only to housing loans for the purchase of an HDB flat, as well as to executive condominiums whose minimum occupation period has not expired.

MSR = monthly mortgage repayment divided by gross monthly income, which must be 30% or below.

Unlike TDSR, MSR looks only at the property loan itself. A car loan or credit card does not change your MSR, but it does count toward TDSR. HDB applies its own eligibility rules to its concessionary loans, so check HDB's guidance for the exact assessment it uses.

The Stress Test: Why Your Repayment Is Calculated at 4%

Banks do not use today's promotional rate to test whether you can afford a loan. According to MAS's guide to calculating TDSR, the medium-term interest rate for residential property purchase loans is the higher of a 4% floor or the thereafter interest rate, meaning the highest rate the lender offers during the loan tenure.

This means your monthly repayment for TDSR purposes is calculated as if your rate were at least 4% a year, even if your actual rate is lower. The stress test makes sure you could still cope if rates rose.

For context, the HDB concessionary housing loan rate was 2.6% a year from 1 July to 30 September 2026, pegged above the CPF Ordinary Account rate of 2.5%, according to the CPF Board. Your actual repayment and your stress-tested repayment can therefore be quite different.

What Counts as Income?

Gross monthly income is the starting point, before CPF or tax. MAS sets specific rules for less stable income. Lenders must apply a minimum haircut of 30% to variable income, such as commission, bonuses and allowances, and to rental income. In practice, at most 70% of that income can count toward your TDSR.

• Fixed salary: counted in full.
• Variable income: averaged over the preceding 12 months, then reduced by at least 30%.
• Rental income: reduced by at least 30%, and lenders typically ask for tenancy documentation.

Employer CPF contributions are not part of your gross salary for this purpose. If much of your pay is variable, expect your assessed income to be noticeably lower than your best month.

How Credit Cards and Credit Lines Are Counted

Revolving credit is counted differently from installment loans. MAS's guide to calculating TDSR says lenders should use the minimum payment due shown on your latest available statement as the monthly obligation. If you cannot provide a statement, the lender applies the facility's monthly interest rate to your total credit limit instead.

Two practical points follow. First, a balance you carry from month to month increases the minimum due and therefore your TDSR. Second, if you cannot show a recent statement, an unused credit limit can still be counted, so keep recent statements ready when you apply.

Separately, MAS's borrowing limit on unsecured credit restricts new credit once interest-bearing unsecured debt exceeds 12 times monthly income for three consecutive months, a rule that applies from 1 June 2019. Reducing card debt before a property purchase helps on both fronts, and so does keeping recent statements for every card you hold, since an unused limit can otherwise be counted.

What the 4% Floor Means in Dollars

The stress test can feel abstract until you see the numbers. Here is the monthly repayment on a $450,000 loan over 25 years at three different interest rates, using standard loan arithmetic:

• At 2.6% a year (the HDB concessionary rate for July to September 2026): about $2,042 a month
• At 3% a year: about $2,134 a month
• At 4% a year (the MAS medium-term floor for residential purchase loans): about $2,375 a month

The gap between 2.6% and 4% is about $333 a month. For TDSR and MSR purposes, a bank assesses the higher figure even if your actual rate is lower. That is why a buyer can comfortably afford today's repayment and still fail the test.

The same arithmetic tells you how much income you need. To keep a $2,375 stress-tested payment within the 30% MSR limit, gross monthly income would need to be about $7,918. Running these numbers before you choose a property is the simplest way to avoid an unpleasant surprise at loan approval.

Worked Example: Passing and Failing the Tests

Income: $7,000 a month gross. Purchase: an HDB flat with a $450,000 bank loan over 25 years, assessed at the 4% medium-term rate.

• Monthly mortgage at 4% over 25 years: about $2,375
• Car loan: $700 a month
• Credit card minimum payment due on the latest statement: $400 a month
• TDSR: ($2,375 + $700 + $400) divided by $7,000 = about 49.6%, which passes the 55% limit
• MSR: $2,375 divided by $7,000 = about 33.9%, which fails the 30% limit

This buyer passes TDSR but fails MSR. At 30% of $7,000, the maximum stress-tested mortgage payment is $2,100 a month, which at 4% over 25 years supports a loan of about $397,800. To pass, the buyer would need a smaller loan, a co-borrower with additional income, or a different property. Clearing the car loan or card debt would improve TDSR but would not change MSR.

Remember to budget separately for stamp duty, which our Singapore stamp duty 2026 guide explains.

How to Improve Your TDSR or MSR

• Pay down unsecured debt before applying, since lower minimum payments and installments reduce your TDSR.
• Clear or reduce a car loan if you are close to the TDSR limit.
• Apply with a co-borrower to combine incomes, if that suits your situation.
• Choose a longer tenure to reduce the monthly installment, remembering that this increases the total interest paid.
• Lower the loan amount through a larger down payment or a less expensive property.

Check where you stand with the Singapore TDSR and MSR Calculator before you make an offer.

Frequently Asked Questions

Sources

• MAS, MSR and TDSR rules
• MAS, Calculating TDSR for property loans
• MAS, Borrowing limit on unsecured credit
• CPF Board, CPF interest rates from 1 July to 30 September 2026 (HDB concessionary rate)