Many homebuyers in Singapore are shocked when the bank issues an In-Principle Approval (IPA) that is far lower than what they expected.

Even high-income borrowers are sometimes approved for surprisingly small loan amounts.

This mismatch between expectation and reality happens because banks assess your affordability very differently from how you calculate it yourself.
They use stricter stress tests, outdated credit bureau records, internal risk policies, and conservative income assessment frameworks.

As a mortgage advisor, this is one of the most common questions clients ask:

“Why is my IPA so low? I thought I could borrow a lot more.”

Below are the hidden, non-obvious reasons banks approve less and what you can do to increase your loan eligibility legally.

1. Your Credit Bureau Score (CBS) Is Not Updated in Real Time (Banks See Data 1–2 Months Back)

Most borrowers assume their latest repayment history is instantly reflected in their credit report, but it is not.

Credit Bureau Singapore updates data monthly, and some banks may pull a report that reflects:

• Data from 4 to 8 weeks ago
  
• Credit card balances that have not been fully updated
  
• Loan payments that have not yet been refreshed
  
• Late payments that still show even after you cleared them recently

   

This means:

• If you paid off a loan recently → It may not show immediately
  
• If you reduced your credit card utilisation → It may not show immediately
  
• If you corrected a late payment → It may still reflect in CBS.

   

Banks use this older snapshot, and it can reduce your IPA significantly.

2. If You Apply With Bank A, Your Bank A Credit Card Spending Is Fully Visible (Ongoing Balances Count Against You)

Here’s something most borrowers do not know:

• Your own bank sees your credit card usage in real time.
  
• They see spending patterns, outstanding balances, repayment timing, and even cash advances.

   

So if you apply with:

• UOB → UOB sees your UOB card behaviour
  
• DBS → DBS sees your POSB/DBS card behaviour
  
• OCBC → OCBC sees your OCBC card behaviour

   

Even if CBS hasn’t updated yet, the bank’s internal data will show your latest balances.

This can affect:

• Your creditworthiness score
  
• Your perceived financial behaviour
• Your TDSR calculation
• Your maximum approved loan

   

Example: 

If you spend on Bank A’s credit card heavily in the month before applying for Bank A’s Mortgage Loan, even if you intend to repay, your IPA may come in much lower.

3. GIRO Payments to In-House or 3rd-Party Loans Are Counted Into Your TDSR

TDSR includes all monthly debt obligations, even those not visible in CBS.

This includes:

• In-house car loans
• Motorcycle loans
• Instalment plans
• Furniture loans
• Jewellery loans
• Renovation loans
• Business loan repayments
• Buy-now-pay-later GIRO deductions
• Education instalments
• Gym packages with instalment plans

   

If the GIRO transaction shows in your bank statement, the bank must treat it as a debt obligation under TDSR, even if CBS does not display it.

This reduces your available debt servicing capacity.

Example:

A $600/month in-house car instalment with Bank A can reduce your loan eligibility by $120,000–$200,000 with Bank A.

4. Bonus or Commission Beyond the Last 3 Months Is Not Counted (Income Haircuts Apply)

Banks typically require:

• Latest 3 months’ payslips
• Latest 1–2 years NOA for variable income earners

   

If your variable income (bonus, commission, incentives) is outside this window, banks won’t count it.

Furthermore, for commission earners, banks apply a 30% haircut to variable income.

Example:

• Basic salary = $4,000
• Commission = $10,000/month average
• Bank counts: $4,000 + ($10,000 × 70%) = $11,000

   

You think you earn $14,000; bank sees only $11,000.
Loan drops drastically.

5. Certain Banks Use Higher Stress-Test Interest Rates (So Your Loan Eligibility Shrinks)

All banks must perform a stress-test rate to ensure affordability under MAS rules.

However:

• Some banks use a test rate of 4.0%
• Others use 4.5%
• Some as high as 4.8%

   

The higher the stress-test rate → the lower your loan approval.

Example:

At 4.0% test rate → Max loan ≈ $1,000,000
At 4.8% test rate → Max loan ≈ $850,000

That’s a $150,000 drop purely due to bank policy.

This is why IPA results vary so widely between banks.

6. Some Banks Calculate Age by Birth Year, Not Birthdate — You Lose 1 Full Year of Tenure

Borrowers are often shocked by this rule.

Example:

• You apply for a loan in Jan 2025
• You were born in Dec 1989
• Some banks treat you as already turning 36 in 2025
• You lose 1 year of tenure immediately

   

Other banks only deduct tenure after your birthday passes.

Loss of even 1 year of tenure reduces loan size:

• 30-year tenure → Higher loan
• 29-year tenure → Lower loan (difference can be $20,000–$40,000)

   

This is a little-known reason IPAs differ drastically.

7. Multiple Recent Credit Applications Reduce Your Loan Eligibility

Banks can see if you recently applied for:

• Credit cards
• Renovation loans
• Personal loans
• Car loans
• Other housing loans

   

If you applied for many credit lines, the bank flags you as credit hungry, which reduces approval amounts or triggers income haircuts.

8. High Credit Card Utilisation Lowers Your Credit Score and Loan Eligibility

Even if you always pay on time, banks penalise you for:

• High utilisation (60–100% of limit)
• Multiple instalment plans
• Revolving balances

   

These lower your CBS grade and banks approve lower loan amounts for weaker credit profiles.

9. Short Employment History Reduces the Income Counted

Banks typically require:

• At least 3 months of stable income
• Many prefer 6–12 months
• Self-employed: 2 years of NOA

   

If you recently changed jobs, even with higher pay, banks may:

• Count only your basic salary
• Discount variable income
• Reduce affordability
• Approve a smaller loan

   

10. Your CPF Usage or Housing Refund Obligations Affect Liquidity Assessment

If you:

• Sold a previous property
• Used large amounts of CPF
• Have accrued interest due
• Have insufficient CPF OA balance

   

Banks assess liquidity risk, which indirectly impacts your borrowing capacity.

11. Existing Property or Car Ownership Triggers Lower Loan-to-Value Limits (LTV Rule)

If you already have:

• 1 property → Max LTV 45%
• 2 properties → Max LTV 35%

   

Even if TDSR allows a high loan, LTV restrictions force a lower loan amount.

Car loans also heavily reduce TDSR allowance.

12. Different Banks Count Income and Debt Differently (Internal Risk Criteria)

Examples:

• Some banks count allowance fully; some haircut 30%
• Some accept year-end bonuses; some ignore
• Some average 3 months; others average 6–12 months
• Some accept overseas income; others don’t
• Some accept rental income at 70%; others at 60%

   

This is why your IPA can differ by $50,000–$300,000 across banks.

How to Increase Your Loan Eligibility (Legal & Effective Methods)

Here are the techniques advisors use to maximise IPA safely:

1. Show Funds (Liquid Assets Proof)

If you demonstrate strong liquidity (cash, investments), banks will:

• Increase your loan size
• Approve borderline TDSR cases

   

Especially useful for self-employed or commission earners.

2. Pledge Funds

You place a sum of money with the bank for 6 months.

Bank counts this as enhanced financial strength, often allowing:

• Higher loan
• Waived income haircuts
• Approval despite short job history

3. Reduce or Clear Debts Before Applying

Even clearing:

• $3,000 credit card balance
• $10,000 personal loan
• One instalment plan

   

Can increase your IPA by tens of thousands.

Car loan $600/month, if cleared or transferred, can increase IPA by $100k–$300k.

4. Pick the Right Bank (Some Approve Much More Than Others)

Because every bank has different:

• Stress-test rates
• Income haircuts
• Tenure calculation
• Age rules
• Internal risk scoring

   

Choosing the right bank can increase your IPA dramatically.

This is why clients often use mortgage brokers or advisors like Fairloan, we know which banks are most favourable for:

• Variable income
• Self-employed
• High credit utilisation
• Young buyers
• Older buyers
• High property price segments

   

5. Add a Co-Borrower or Guarantor

Combining income increases TDSR capacity, but must be used carefully depending on long-term plans (e.g., resale, decoupling).

6. Improve Credit Score 2–3 Months Before Applying

Simple actions like:

• Paying bills early
• Reducing utilisation below 30%
• Avoiding new credit applications
• Clearing instalments

   

Can significantly increase loan eligibility.

Final Word: A Low IPA Does Not Mean You Can’t Buy, It Means You Haven’t Optimised Yet

Most borrowers who receive a low IPA think:

“The bank doesn’t trust my income.”
“My salary too low?”
“I must buy a smaller unit?”

In reality, many factors are technical, not personal.

With proper planning, clearing debts, choosing the right bank, optimising income documents, pledging funds, or showing liquidity, loan eligibility often increases by 10%–40%.