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Singapore Mortgage Guide: TDSR, MSR, and Stress Testing

Updated May 2026 | PSF Insight

Banks in Singapore do not lend you what you can afford on paper. They lend you what you can afford under MAS's stress test rules, which assume your interest rate is materially higher than today's quoted rate, and which cap your total debt servicing at a fixed percentage of income. If you have not run your own numbers through these rules before house hunting, your maximum loan number is almost certainly wrong.

This guide breaks down the three mechanics that determine your borrowing capacity: TDSR, MSR, and the medium-term stress test rate. Then we work through the LTV ladder, ABSD interaction, and a worked example.

TDSR: The Universal Cap

The Total Debt Servicing Ratio caps your total monthly debt payments at 55% of gross monthly income. This includes:

• Property mortgage instalments (existing and new)
• Car loan instalments
• Personal loan instalments
• Student loan instalments
• Credit card minimum payments (or 3% of outstanding balance)
• Any other instalment debt

TDSR applies to all property loans, residential or commercial, owner-occupied or investment. Self-employed borrowers and those with variable income face an automatic 30% haircut on the income used in the calculation.

MSR: The HDB and EC Cap

The Mortgage Servicing Ratio caps the new property's mortgage at 30% of gross monthly income, and applies only to:

• HDB flats (resale and BTO)
• Executive Condominiums purchased directly from the developer

MSR is in addition to TDSR. The binding constraint is whichever rule produces the lower loan amount, and for HDB and EC purchases, MSR is usually the binding constraint.

The 4% Stress Test Rate

MAS requires banks to calculate your TDSR and MSR using a medium-term interest rate of 4% for residential property, even if your actual quoted rate is 2.5% or 3.5%. This is the single most important number to internalise. It means a SGD 1 million loan at 4% over 25 years carries an instalment of roughly SGD 5,278 for stress test purposes, regardless of what the bank is actually offering.

For commercial property, the stress test rate is 5%. For non-residential or shophouse loans, expect similar or higher.

Loan-to-Value: The LTV Ladder

Singapore's LTV framework reduces the maximum loan as your number of outstanding housing loans grows:

• First housing loan: up to 75% LTV if loan tenure is 30 years or less and ends before borrower turns 65, otherwise capped at 55%
• Second housing loan (one outstanding): up to 45% LTV, or 25% if tenure conditions not met
• Third or subsequent housing loan: up to 35% LTV, or 15% if tenure conditions not met

The remaining gap is paid in cash and CPF. For the first loan, minimum cash downpayment is 5%. For subsequent loans, minimum cash downpayment is 25%.

ABSD: Layered on Top

ABSD applies to the purchase price, not the loan, and is paid in cash within 14 days of signing the option to purchase. Current rates for residential property:

• Singapore Citizens: 0% on first, 20% on second, 30% on third and subsequent
• Permanent Residents: 5% on first, 30% on second, 35% on third and subsequent
• Foreigners: 60% on any residential purchase
• Entities and trustees: 65%

BSD applies on top of ABSD on a progressive scale up to 6% for the portion above SGD 3 million for residential.

Putting It Together: A Worked Example

A married SC couple, both 40 years old, combined gross income SGD 20,000 per month. They are buying their first private property at SGD 1.8 million.

Step 1: TDSR Capacity

55% of SGD 20,000 = SGD 11,000 per month available for total debt servicing. Assume they have a SGD 800 car loan and SGD 200 in credit card minimums. Available for new mortgage: SGD 10,000.

Step 2: Maximum Loan at 4% Stress Rate, 25-Year Tenure

Monthly instalment of SGD 10,000 at 4% over 25 years supports a loan of approximately SGD 1.89 million. TDSR is not the binding constraint here.

Step 3: LTV Cap

First housing loan, 25-year tenure, both buyers under 65 at loan end: 75% LTV applies. Maximum loan = 75% of SGD 1.8 million = SGD 1.35 million. LTV is the binding constraint.

Step 4: Downpayment

• Cash + CPF downpayment: 25% of SGD 1.8 million = SGD 450,000 (5% must be cash, so SGD 90,000 minimum cash)
• BSD: approximately SGD 64,600 on SGD 1.8 million
• ABSD: 0% (first property)
• Legal fees: roughly SGD 3,000

Total cash + CPF outlay: roughly SGD 517,600. Loan: SGD 1.35 million. Monthly instalment at actual 3.5% rate over 25 years: approximately SGD 6,756.

Common Mistakes to Avoid

1. Assuming the loan amount based on quoted rate, not stress test rate. Always calculate TDSR using 4% for residential
2. Forgetting to count credit card minimums. A SGD 30,000 outstanding credit card balance reduces TDSR capacity by SGD 900 per month
3. Stretching tenure to maximise LTV. If the loan ends after age 65, LTV drops sharply. Run the math both ways
4. Mixing variable income. Bonus and commission income is haircut by 30%. Use base salary for planning
5. Underestimating stamp duty. BSD plus ABSD plus legal fees can add 5% to 25% on top of the property price depending on profile

How to Plan Your Affordability

• Pull a free credit report from CBS to confirm what banks will see
• List all monthly debt obligations honestly, including any guarantor loans
• Use a 4% stress rate and a tenure that ends before age 65 to calculate the safe loan ceiling
• Add a 10% buffer for assessment quirks (variable income, freelance, recent job change)
• Get an in-principle approval from at least two banks before committing to a property

The Singapore mortgage system is conservative by design. The 4% stress test rate has saved many borrowers from overextending in low-rate environments. Treat the rules as a feature rather than a hurdle, and you will end up with a property you can carry comfortably across cycles.