One of the most important questions every homebuyer asks is: “How much home loan can I actually borrow?” Whether you are buying an HDB flat or a private property in 2026, your maximum loan amount depends on several important rules, including the stress test rate, MSR, TDSR, income type, existing liabilities and even whether you intend to live in the property or rent it out.

Understanding these rules is critical, especially because Singapore’s property financing framework is designed to protect buyers from over-borrowing. With interest rates stabilising in 2026 and banks tightening their internal assessment methods, buyers must be fully aware of the limits before committing to any purchase.

This guide explains, in simple terms, how banks calculate your maximum loan, what affects your loan eligibility, and what strategies you can use to improve your loan amount.

1. The Stress Test: Why Banks Use 4% to Calculate Your Maximum Loan

Whether you are buying an HDB flat or a private property using a bank loan, one rule applies to everyone: banks must “stress test” your loan at a minimum interest rate of 4%. This is a regulatory requirement set by MAS (Monetary Authority of Singapore) to ensure that borrowers can still repay their mortgage even if interest rates rise in the future.

The logic is straightforward. Even though actual mortgage rates in 2026 are currently around 1.30%–1.78% for fixed packages and 1.30%–1.60% for floating SORA packages, banks cannot calculate your borrowing ability based on these low rates. Instead, they use a 4% test rate to simulate a scenario where interest rates spike. If your income and liabilities allow you to pass this stress test, the bank considers you financially stable enough to service your loan over the long term.

This stress-tested repayment amount is compared to your income using the MSR or TDSR rules (depending on the type of property). Even if you are financially comfortable, the stress test often becomes the biggest reason your maximum loan is lower than you expect, especially for buyers with moderate income or existing debt commitments.

2. MSR: The 30% Rule for HDB and EC Purchases

The Mortgage Servicing Ratio (MSR) applies only to:

• HDB flat purchases (BTO or resale) using a bank loan
• EC purchases directly from the developer
• ECs that are still within the 5-year MOP (including refinancing)

   

MSR caps your monthly mortgage repayment at 30% of your gross monthly income.

This means that no matter how high your income is or how attractive the property price may be, your monthly loan instalment, calculated using the 4% stress test rate and a 30-year tenure cannot exceed 30% of your income. If it does, your maximum loan amount is reduced until it meets the MSR limit.

MSR is designed to prevent homeowners from spending too large a portion of their income on housing. Unlike TDSR (which considers all other debts), MSR looks solely at your mortgage repayment for this specific HDB or EC transaction.

For example, if you earn $6,000 a month, the maximum instalment you can service under MSR is $1,800. Based on the 4% stress test, this usually translates into a loan amount of roughly $377,000 based on 30-year tenure. This rule explains why many HDB buyers are surprised that their bank-approved loan amount is lower than their expectations.

It is important to note that MSR applies on top of TDSR. So HDB buyers must pass both rules to secure their loan.

3. TDSR: The 55% Rule for All HDB and Private Property Bank Loans

The Total Debt Servicing Ratio (TDSR) applies to:

• All private property purchases
• All HDB purchases made using a bank loan
• All refinancing of private properties (with some exceptions explained later)

   

TDSR caps your total monthly debt obligations, including mortgage instalments, car loans, student loans, personal loans, credit card minimum payments and outstanding obligations at 55% of your gross monthly income.

Unlike MSR, which considers only the mortgage, TDSR uses a holistic view of your finances. Even if your income is high, a single car loan or credit card instalment may significantly reduce your available room under TDSR. This is why borrowers sometimes have a large income but still receive a lower-than-expected loan amount.

For HDB buyers, this means something unique:
You must pass BOTH MSR (30%) and TDSR (55%).

Private property buyers only need to pass TDSR.

Because TDSR is calculated using the 4% stress test rate for the mortgage portion, it remains one of the most important determinants of your maximum bank loan in 2026.

4. Exceptions and Special Cases: When MSR or TDSR May Not Apply (Refinancing Rules)

While MSR and TDSR set strict limits for purchases, refinancing rules are more flexible.

A. TDSR Exemption for Refinancing (Own-Stay Properties Only)

Most banks allow refinancing without applying TDSR as long as:

• The loan is for own-stay use
• There is no increase in loan amount
• The borrower has a good repayment history

   

This exemption is extremely useful for homeowners whose income has decreased or whose TDSR has worsened over time. Without this rule, many Singaporeans would be stuck paying higher legacy interest rates.

However, this flexibility does not apply if you want to increase your loan amount through cash-out (ETL) or additional financing. In such cases, TDSR must be met.

B. For Investment Properties (Non-Owner Occupied)

Banks generally enforce TDSR for refinancing of investment properties.
However, some banks allow the exemption of TDSR with the following criteria:

• A 3% loan paydown before approving refinancing
• Proof of rental income
  

   

Investment properties carry higher risk in the bank’s eyes, so borrowing criteria are stricter.

C. Refinancing ECs Within Minimum Occupation Period (MOP)

For ECs still within the 5-year MOP, MSR continues to apply for refinancing, because the property is still governed by HDB rules. After the 5th year, MSR no longer applies, and only TDSR is required.

D. Banks Offering Higher Refinancing Limits

Some banks allow refinancing up to 100% of outstanding loan for own-stay properties. A few banks may even accept slightly higher than 100% to cover legal fees or fire insurance, but this is assessed individually.

5. Increasing Your Maximum Loan Using Show Funds or Pledged Funds

One of the widely used and MAS-approved methods to increase your loan amount is the use of show funds or pledged funds. These methods help strengthen your financial profile, especially if your monthly income alone does not comfortably pass TDSR or MSR.

Show Funds

Show funds involve temporarily placing additional funds into your bank account to demonstrate financial stability. Banks consider this as part of your financial strength and can be more flexible with approval when they see a strong cash buffer. This does not directly change your income calculation, but it improves the bank’s confidence in granting the loan.

Pledged Funds

Pledged funds are more powerful. When you pledge a sum of money to the bank for a fixed duration (typically 2 to 4 years), the bank can treat this as income support. This increases your effective income for TDSR and MSR calculations, allowing you to qualify for a higher loan amount.

For example, a borrower who does not meet TDSR due to commission-based income or variable cashflow may use a $100,000 pledge to boost his loan eligibility. This is entirely legitimate and commonly used by business owners, freelancers or individuals with non-linear income patterns.

Risks and Considerations

While show and pledge funds are useful, they must be used responsibly. The pledged amount typically cannot be touched until the expiry of the pledge, and early withdrawal may lead to penalties and require partial repayment of the mortgage. Borrowers should always assess their liquidity needs before proceeding.

Putting It All Together: How the Bank Calculates Your Final Loan Amount

Consider a borrower purchasing an HDB resale flat with a gross monthly income of $7,000 and an existing car loan of $500 monthly. The bank will:

1. Stress test the mortgage at 4%

    

2. Apply the MSR 30% rule → maximum mortgage instalment allowed: $2,100

    

3. Apply the TDSR 55% rule → maximum combined debt allowed: $3,850

    

4. Deduct the existing $500 car loan → remaining $3,350 allowed for mortgage instalment

    

The final loan amount will be whichever is lower after applying the above rules.

For a private property buyer, MSR does not apply, but TDSR can still significantly reduce the loan if there are other debt obligations.

This is why two individuals with identical income can end up with very different loan amounts,  their existing liabilities, property type and intended use (own-stay vs investment) all influence the outcome.

Fairloan’s 2026 Advice: Understanding Your Maximum Loan Before You Buy

The smartest thing any buyer can do whether purchasing an HDB or private property, it is to check your loan eligibility early. Many buyers fall in love with a property only to realise later that their bank loan is lower than expected. Given the strict MSR and TDSR rules, especially the 4% stress test, pre-calculation is essential.

Fairloan helps clients:

• Check eligibility across multiple banks
• Identify which bank offers the highest loan for your profile
• Strategise using show funds or pledged funds
• Understand whether you qualify for full TDSR exemption during refinancing
• Optimise your loan structure for long-term affordability
• Comparing Rates across all banks as well

Different banks also treat income sources differently, some are more friendly to variable income, commission earners or multiple property owners. Knowing which bank fits your profile can easily change your loan amount by tens or hundreds of thousands of dollars.

Conclusion: Your Maximum Loan Depends on the Rules and Strategies

Your maximum home loan in Singapore depends on a combination of regulatory rules and strategic planning. The 4% stress test ensures buyers are protected from future rate spikes. MSR ensures HDB buyers do not overextend themselves. TDSR provides a holistic view of your total financial burden. Refinancing exemptions offer breathing room for homeowners, while show funds and pledged funds give buyers a legitimate way to strengthen their approval chances.

Instead of asking, “Which bank gives the highest loan?”, the better question is:
“How do I structure my finances to secure the maximum loan safely and sustainably?”

With the right approach and the right advisor, buyers can confidently navigate Singapore’s loan rules and secure the financing needed to purchase their home. 

Speak to us to find out more.