TDSR Calculator

The Total Debt Servicing Ratio (TDSR) framework is introduced in Singapore so that property buyers will not borrow more than they can afford. It basically calculates the percentage of your income that can go into servicing your loan. The TDSR limit is currently 60%, which means all your debt obligations (student loans, credit card debts, car loans, personal loans, and so on), cannot exceed 60% of your income. This applies to property loans granted by all financial institutions (not just banks).

There are several criteria when it comes to applying for a home loan in Singapore, such as level of income, number of loans you’re currently servicing, credit history, as well as age.

How much home loan you can afford is regulated by the loan-to-value ratio, also known as LTV. This defines the maximum amount of mortgage loan a bank can loan you as a percentage of the property’s value or purchase price whichever is lower. For your first property, you are allowed to borrow 75% of LTV limit for loan tenure of 30 years or less up to age 65, or 55% LTV for loan tenure of more than 30 years, or if loan extends past the age of 65.

There are 3 extra factors you should consider when calculating TDSR. First, banks implement a “stress test” to make sure that your repayment must still be within TDSR constraints even if interest rates rise to 3.5%. Second, if you are a self-employed individual and have variable income rather than a fixed one, your income will be reduced by 30% in the calculation. Third, for a joint application, an income-weighted average age (IWAA) of both borrowers will be used when calculating maximum loan tenure.

If your monthly home loan repayment and monthly debt obligations surpass the 60% TDSR, you’ve got several options:

1. Take the maximum loan tenure to reduce the monthly installment (MI) until you’re below the 60% mark.
2. Focus on paying off a debt or two so you can free up the disposable monthly income to use towards your home loan repayments.
3. Ask your bank or financial institution for an exemption, which may or may not be approved by its credit committee (only applicable to refinancing and if property is bought before June 2013). In most cases, if property is owner-occupied, for refinancing banks are willing to increase the TDSR ratio.
4. Pledge or show of funds and net-worth to increase the assessable income within the TDSR framework formula.