MSR and TDSR in Singapore Mortgages: What Every Homebuyer Must Know

For most Singaporeans, buying a home is the single most significant financial commitment in their lifetime. Whether it is a Build-to-Order (BTO) flat, a resale HDB, or a private condominium, property purchases usually involve taking up a housing loan. To ensure that borrowers do not overextend themselves financially, the Monetary Authority of Singapore (MAS) has implemented two key frameworks: the Mortgage Servicing Ratio (MSR) and the Total Debt Servicing Ratio (TDSR).

These loan rules are not just technical guidelines; they shape how much you can borrow, which properties you can afford, and even the financial risks you carry. For homebuyers, understanding MSR and TDSR is critical to making informed, sustainable decisions. This essay will explore the definitions, rationale, calculations, and implications of MSR and TDSR, as well as their impact on different buyer groups in Singapore’s dynamic housing market.

What is the Mortgage Servicing Ratio (MSR)?

The Mortgage Servicing Ratio (MSR) is the portion of a borrower’s gross monthly income that can be used to service mortgage repayments. In Singapore, the MSR is capped at 30% of gross monthly income.

This means that if your household earns $6,000 per month, your monthly mortgage instalments cannot exceed $1,800 under MSR rules.

Applicability

The MSR applies specifically to:

• HDB flats (new BTO and Resale)
  
• Executive Condominiums (ECs) purchased directly from developers
  
  

It does not apply to private property purchases or resale ECs after the Minimum Occupation Period (MOP).

Purpose

MSR ensures that Singaporeans do not spend an excessive portion of their income on housing. By capping mortgage repayments at 30% of income, MAS reduces the risk of homeowners becoming over-leveraged and vulnerable to economic downturns or rising interest rates.

What is the Total Debt Servicing Ratio (TDSR)?

The Total Debt Servicing Ratio (TDSR) caps the proportion of a borrower’s gross monthly income that can be used to repay all debt obligations, not just the home loan. This includes car loans, student loans, credit card debts, and personal loans. The TDSR is set at 55% of gross monthly income.

For example, if your household income is $6,000, the maximum total debt repayments (housing + car loan + credit cards, etc.) cannot exceed $3,300 per month.

Applicability

TDSR applies to all property purchases in Singapore:

• HDB flats
  
• Executive Condominiums
  
• Private condominiums and landed properties
  
  

Purpose

The TDSR was introduced in 2013 to rein in excessive borrowing during a period of rapid property price growth. By considering all debt obligations, TDSR ensures households have enough disposable income for daily expenses and savings, even after servicing loans.

MSR vs TDSR: Key Differences

IMPORTANT: In practice, homebuyers must pass both MSR and TDSR tests when applying for a housing loan for HDBs or new ECs. For private property purchases, only TDSR applies.

How Are MSR and TDSR Calculated?

Step 1: Determine Gross Monthly Income

Gross monthly income includes but not limited to: 

• Fixed monthly salary (basic + allowances)
  
• Variable income (bonuses, commissions), usually averaged over 12 months
  
• Rental income (subject to haircut; banks may only count 70%)
  
  

Excluded: employer CPF contributions, investment income not supported by documentation.

Step 2: Calculate Loan Repayments Using “Stress-Test” Interest Rates

Banks are required to assess loan affordability using a medium-term interest rate floor (currently 4% for residential loans as of Sept 2025). This ensures buyers can still repay loans even if interest rates rise.

Step 3: Apply MSR and TDSR Caps

• MSR Test: Monthly mortgage ≤ 30% of income (for HDB/EC)
  
• TDSR Test: Total monthly debt ≤ 55% of income
  
  

If both conditions are met, the borrower qualifies. If not, the loan quantum will be reduced.

You may increase your max loan eligibility, capped at the relevant Loan-To-Value (LTV) by using Show fund or Pledge fund 

Why MSR and TDSR Are Important

Safeguarding Financial Stability

These rules protect households from taking on unmanageable debt. In a country where over 90% of households own homes, systemic stability is crucial. A wave of defaults could destabilise the financial system.

Encouraging Prudence in Borrowing

By capping loan amounts, MSR and TDSR encourage families to consider property within their means, rather than stretching for aspirational purchases.

Stabilising the Property Market

These measures help moderate demand and dampen speculative buying, contributing to a more stable property cycle.

Impact on Different Buyer Groups

1. First-Time HDB Buyers

• MSR can be the bigger hurdle, especially for young couples with modest incomes.
  
• Even if they pass TDSR, their housing loan may be capped by MSR’s stricter 30% limit.
  
• This influences decisions between BTO vs resale HDB.
  
  

2. Executive Condominium (EC) Buyers

• Must satisfy both MSR and TDSR at purchase.
  
• Given higher EC prices, many middle-income households find loan eligibility constrained by MSR.
  
  

3. Private Property Buyers

• Only subject to TDSR (55%).
  
• Buyers with significant non-housing loans (e.g., car loans, credit card debt) may find borrowing capacity reduced.
  
  

4. Upgraders

• Those moving from HDB to private may face TDSR issues if they have an outstanding HDB loan.
  
• Multiple property owners are also bound by TDSR, limiting speculative purchases.
  
  

Common Challenges and Workarounds

1. Income Haircuts: Banks apply haircuts on variable income, reducing loan eligibility.
   
2. Joint Borrowers: Adding a spouse as a co-borrower can boost income, increasing loan eligibility.
   
3. Loan Tenure: Extending tenure lowers monthly instalments, helping meet MSR/TDSR limits. However, tenures are capped (for 55% LTV: 30 years for HDB, 35 years for private).
   
4. Clearing Debts: Paying off car or personal loans before applying can improve the TDSR ratio.
   
   

Criticisms of MSR and TDSR

• Restrictive for Young Families: Critics argue that MSR disproportionately affects lower-income young couples, limiting choices in the resale market.
  
• Lock-Out Effect: TDSR has been said to prevent even financially responsible households from upgrading, dampening property aspirations.
  
• Less Flexibility in Special Cases: Self-employed individuals or those with irregular income often face stricter assessments.
  
  

Nonetheless, MAS has kept these frameworks in place, citing long-term financial prudence.

The Future of MSR and TDSR in Singapore

As Singapore’s economy evolves, so too may these rules. With rising interest rates globally and property prices trending upwards, MSR and TDSR remain essential guardrails. However, policymakers may adjust parameters (such as stress-test interest rates) in response to market conditions.

In the long term, these ratios are likely to remain permanent fixtures in Singapore’s property financing landscape, ensuring stability for both households and the financial system.

Conclusion

Understanding MSR and TDSR is not just a technical requirement; it is central to making informed housing decisions. MSR ensures that Singaporeans spend no more than 30% of their income on housing loans, while TDSR ensures that overall debt obligations stay within 55% of their income. Together, they form a comprehensive framework that protects both individual borrowers and the broader economy.

For homebuyers, this means being realistic about property choices, managing other debts wisely, and planning mortgage financing carefully.

FAQS

1. What is the Mortgage Servicing Ratio (MSR) in Singapore?
The MSR limits your monthly housing loan repayments to 30% of your gross monthly income. It applies to HDB flats and new Executive Condominiums (ECs), ensuring borrowers do not overcommit on housing.

2. What is the Total Debt Servicing Ratio (TDSR)?
The TDSR caps your total monthly debt repayments; including housing, car, credit cards, and personal loans, at 55% of gross monthly income. It applies to all property types in Singapore.

3. Does TDSR apply to HDB loans?
Yes. If you’re buying an HDB flat or new EC, you must pass both MSR (30%) and TDSR (55%) tests. For private property, only TDSR applies.

4. How can I improve my chances of passing MSR and TDSR?
You can increase your loan eligibility by clearing existing debts, extending loan tenure (within limits), or adding a co-borrower’s income. Planning with a mortgage advisor helps optimise affordability.