What is TDSR?
The Total Debt Servicing Ratio (TDSR) is a rule from the Monetary Authority of Singapore (MAS). It helps make sure borrowers do not take on more debt than they can manage.
- Under TDSR rules, your total monthly debt cannot exceed 55% of your gross monthly income. This includes home loans, car loans, personal loans, and credit card debt.
- All banks and financial institutions in Singapore must adhere to this rule when assessing property loans.
What Counts as Income?
When applying for a home loan, banks will consider all verifiable sources of income, including:
1. Employment Income
- The monthly fixed salary includes fixed allowances. Payslips and CPF contribution history support this. You can use 100% of this fixed income when applying for a loan.
- For variable bonuses or commissions, banks must reduce the amount by 30%. This discount accounts for volatility. The IRAS Notice of Assessment shows your total employment income for the year.
2. Self-Employed / Business Income
- People usually check net trade income using the latest Notice of Assessment. However, some banks may ask for two years of data.
- Banks may also apply a 30% haircut to account for business risk and variability.
3. Rental Income
- Rental from properties owned can be included, but usually after a 30% haircut.
- For tenancy agreements that last more than 6 months, you must provide a stamp duty certificate for rental income.
4. Investment Income
- Investors can sometimes consider dividends from well-known public companies or tier 1 dividends from private businesses. However, not all banks see it this way.
- The information must be well-documented. It should be recurring and verifiable. You can accomplish this through crediting statements, dividend slips, or board resolutions. You typically need at least 2 years of records.
- Also subject to haircutting by the bank.
5. Eligible Financial Assets
- Cash Singapore dollars (pledging or unpledged basis has a differing impact).
Comparison Table: Pledged vs Unpledged Assets (MAS 645)
| Criteria | Pledged Assets | Unpledged Assets |
| Definition | Assets pledged to the bank for 4 years. | Provides a smaller boost to TDSR due to haircut. |
| Recognition Value | 100% of asset value is recognized. | Only 30% of asset value (70% haircut). |
| Cash S$ | Pledged under Fixed deposits | Cash savings, show bank statements |
| Flexibility | Locked in – cannot be freely withdrawn during pledge period. | Fully flexible — borrower can liquidate at any time after completion of the loan. |
| Impact on Loan Eligibility | Maximizes notional income, giving stronger support to TDSR compliance. | Provides a smaller boost to TDSR due to the haircut. |
Amortise the value of the eligible financial assets of the borrower, after applying the percentage deductions, over a period of 48 months.
✅ Key Insight:
- If the borrower’s income is just shy of passing TDSR, pledging assets gives the most leverage.
- If the borrower values flexibility (not tying assets down), then unpledged recognition is an option, though weaker.
Other Eligible Financial assets (typically on an unpledged basis only)
- Units in a collective investment scheme authorised or recognised by the Authority under the Securities and Futures Act (Cap. 289);
- Units in a business trust registered with the Authority under the Business Trusts Act (Cap.31A);
- Debentures or stocks issued or proposed to be issued by a government;
- Debentures, stocks, or shares issued or proposed to be issued by a corporation or body unincorporated;
- Structured deposits;
- Foreign currency notes and coins (including deposits); and
- Gold.
“These should have a secondary market or a good reason for their value. They should also be free of any claims.”
6. Other Verifiable Income
- Alimony/maintenance income (if supported by legal documentation, not all banks consider this).
⚠️ What is Not Considered as Income?
- One-off windfalls (e.g., inheritance, lottery).
- Undocumented or cash earnings without supporting evidence.
- Future expected income (e.g., promotion or pay raise not yet in effect).
📌 Key Takeaways
- The TDSR cap is 55% of gross monthly income.
- Banks apply haircuts to variable or non-fixed income sources.
- Maintaining proper documentation (payslips, CPF, NOA, tenancy agreements, bank crediting statements) is essential to maximize your loan eligibility.
Would you like to engage IQrate to determine your in-principle approval loan eligibility, helping you assess your affordability and plan your budget for your next intended property purchase?
Our experienced mortgage brokers can share with you what can and cannot be considered for income inception by different banks.