Financing Guide

How TDSR Is Calculated: The 4% Floor, the 30% Income Haircut and What Counts as Debt

Banks cap your total monthly debt at 55% of your income, but the MAS rules set how that income and debt are measured, and they are stricter than the headline. Most buyers who feel their bank "undervalued" their income are meeting the 30% haircut or the 4% interest assumption. Here are the mechanics, with a worked example.

The formula

TDSR = (your total monthly debt obligations ÷ your gross monthly income) × 100%. For property loans where the Option to Purchase was granted on or after 16 December 2021, the threshold is 55%. MAS expects loans not to exceed it, and loans above it only in exceptional cases that must be documented, subjected to enhanced credit review, reported to MAS and, for refinancing, covered by a debt reduction plan. See TDSR vs MSR for how it compares with the 30% mortgage cap on HDB flats.

What counts as debt (the top of the fraction)

All outstanding debt obligations, including:

• Property-related loans, including the one you are applying for
• Car loans, student loans and renovation loans
• Credit card loans and any other secured or unsecured loans, including revolving loans

Banks verify these with supporting documents and credit bureau checks. For revolving loans: for a secured one, MAS applies the medium-term rate to the amount drawn; for an unsecured one, the bank uses the minimum due on the latest statement, or applies the loan's monthly rate to the full credit limit if no statement is provided.

The 4% floor on the new loan

To estimate the monthly instalment on the loan you are applying for, banks must use a medium-term interest rate:

The "thereafter rate" is the highest rate the bank offers at any time during the loan, usually the rate after the introductory or lock-in period. This rate applies only to the loan under application, not to your existing property loans. MAS says the purpose is to make sure borrowers can keep paying if interest rates rise.

What counts as income (the bottom of the fraction)

• Gross monthly income before tax, excluding the employer's CPF contribution.
• A minimum 30% haircut on variable income (commission, bonus, allowance) and on rental income. Variable income is the average of the last 12 months' earnings.
• Rental income must be backed by a stamped tenancy agreement signed by you as landlord and the tenant, with at least six months remaining.
• Eligible financial assets can be converted into an income stream over 48 months, after haircuts. Singapore-dollar deposits pledged for at least 4 years need a minimum 0% haircut. Other financial assets, such as stocks or foreign currency, pledged for at least 4 years need at least 30%. Unpledged assets, or assets pledged for under 4 years, need at least 70%.

When an existing loan can be excluded

If you already own a property and are buying another, the existing property's monthly loan can be excluded from your TDSR in specific cases: for an HDB flat or EC still within its MOP, a signed undertaking to HDB to sell within the stated period plus a declaration; for a private property or an EC past its MOP, a signed Sale and Purchase Agreement with an IRAS certificate that stamp duty has been paid; for an HDB flat being sold, a letter from HDB approving the sale. It can also be excluded once the loan has been discharged.

Worked example

This is an illustration using MAS's method, not a bank offer. Suppose you earn a fixed $10,000 a month and an average of $2,000 a month in commissions. You have a car loan instalment of $800 and a credit card minimum due of $50.

If the same person had no variable income haircut and no car loan, the loan could be considerably higher, which shows how much the haircut and existing debt matter. Remember the loan-to-value limit and minimum cash can cap the loan below the TDSR figure; see how much loan you can get, and use PropLeh's Maximum Loan Calculator with your own numbers. For a joint loan, banks assess combined income and debts.

Where TDSR does not apply

TDSR applies to individuals and to any loan to purchase or secured by property, including refinancing, in Singapore or abroad. It does not apply to company loans (which have other credit tests), though an individual setting up a company solely to buy property is still assessed. Exceptions include refinancing an owner-occupied home (not an investment property, which needs a debt reduction plan), bridging loans repaid within 6 months, loans secured against a collateral pool where property is under 50% of the credit limit, and mortgage equity withdrawal loans where total LTV does not exceed 50%. See refinancing.

FAQ

Related guides

• TDSR vs MSR Singapore: What's the Difference
• Co-Borrowers and Guarantors on a Singapore Home Loan
• CPF Home Protection Scheme: Who Needs It, Premiums

Figures current as of October 2026, from MAS's explainers. MAS sets minimum requirements, and banks may be more conservative. The worked example is illustrative only; your own loan depends on the bank's assessment. This guide is general information only and is not financial advice.