Mortgage Loan

Understanding Singapore’s Total Debt Servicing Ratio (TDSR)

March 19, 2025

The Total Debt Servicing Ratio (TDSR) is a critical regulation in Singapore’s housing loan market, ensuring borrowers do not take on excessive debt relative to their income. Implemented by the Monetary Authority of Singapore (MAS) in 2013, the TDSR applies to all financial institutions (FIs) and restricts the percentage of a borrower’s gross monthly income that can go toward repaying debts, including home loans.

Current TDSR Limits (2025 Update) & Loan Eligibility

As of 2025, the TDSR cap remains at 55%, meaning that the total monthly debt repayments—including mortgages, car loans, credit card debts, personal loans, and student loans—cannot exceed 55% of a borrower’s gross income.

For example, if an individual earns $6,000 per month, their total monthly debt commitments must not exceed $3,300. If they already have a car loan of $1,000 per month, the maximum allowable mortgage repayment would be $2,300.

The TDSR stress test interest rate was revised from 3.5% to 4% or the thereafter rate of the interest package (whichever is higher) on 30 September 2022 to account for rising global interest rates at that time. This meant that borrowers had to demonstrate their ability to repay loans at a higher assumed rate, effectively reducing their loan eligibility.

With mortgage interest rates declining in 2025, loan eligibility has improved slightly compared to the period between end of September 2022–2024. Banks are offering lower interest rates on home loans and in most cases today, the stress test rate applied by banks in Singapore is calculated at 4% today as the thereafter interest rate has fallen to below 4%, thus increasing loan eligibility of borrowers.

TDSR vs. LTV (Loan-to-Value) Limit

The TDSR works alongside the Loan-to-Value (LTV) limit, which determines the maximum loan amount based on the property’s valuation. The LTV limit depends on the number of existing housing loans:

First housing loan: Up to 75% LTV if tenure is ≤30 years and borrower’s age + loan tenure is ≤65 years.
Second housing loan: LTV reduced to 45% or lower, requiring a higher cash down payment at 25%.
Third housing loan or more: LTV limit drops to 35% or less.

Borrowers with longer loan tenures (exceeding 30 years for private properties or 25 years for HDB flats) or who will be older than 65 when the loan matures will see their LTV limit drop by 20% in each tier, 75% to 55%, even for their first home loan.

Impact of TDSR on Property Purchases & Refinancing

For new home buyers, the TDSR ensures they do not overextend themselves financially. Property investors must also account for all existing loans when taking new ones, affecting their ability to finance additional purchases.

For refinancing, MAS has allowed certain exemptions from the TDSR framework:

Owner-occupied homes bought before June 2013 may be exempt if the loan amount and tenure are not increased.
Investment property may be exempted if owners commit to a 3% debt reduction plan.
Repricing (switching loan packages within the same bank) Owner-occupied homes are not subject to TDSR rules, provided the loan tenure and amount remain unchanged. Similarly, TDSR would be applicable should the request be for an investment property unless the owner commits to a 3% debt reduction plan.

Key Considerations for Homebuyers in 2025

Interest Rates Are Falling: After peaking in recent years, mortgage rates are gradually coming down, making home loans slightly more affordable.
Plan Your Debt Carefully: Having multiple outstanding loans (car, renovation, education) can significantly impact how much you can borrow under TDSR.
LTV vs. TDSR: Even if a bank offers a high LTV loan, TDSR rules might still cap your borrowing power based on your total debt burden

Final Thoughts

If you’re planning to buy, refinance, or invest in property in Singapore, understanding TDSR and LTV rules is essential. Ensure that your monthly debt obligations remain within 55% of your gross income, and consider refinancing options if you need better loan terms.

Would you like help comparing mortgage rates from different banks? We can assist in finding the best home loan deals available in Singapore through IQrate.