get an agent

Buy with an Agent

Dedicated experts at your service

Documentation Services

Leave the paperwork to us

do it yourself

Browse New Launch Condos

Find new units for sale

Prefer to do-it-yourself?

Check out how our platform can help

Browse Resale Listings

Connect with sellers through our app

RESOURCES

Calculate Buyer’s Stamp Duty

Find the amount payable when buying

Affordability Calculator

Find the amount payable when buying

How to Buy an HDB

A step-by-step guide to buying HDB

How to Buy a Private Property

A step-by-step guide to buying condo/landed

get an agent

Sell with an Agent

Dedicated experts at your service

Documentation Services

Leave the paperwork to us

do it yourself

Prefer to do-it-yourself?

Check out how our platform can help

Post a Listing for Free

Connect with buyers through our app

RESOURCES

Calculate Seller’s Stamp Duty

Find the amount payable when selling

How to Sell my HDB

A step-by-step guide to selling HDB

How to Sell my Private Property

A step-by-step guide to selling condo/landed

HOME E-VALUATION

For tenants

Rent with an Agent

Dedicated experts at your service

RESOURCES

How to Rent an HDB

A step-by-step guide to renting HDB

How to Rent a Private Property

A step-by-step guide to selling condo/landed

For landlords

Lease with an Agent

Dedicated experts at your service

Lease Documentation

Leave the paperwork to us

RESOURCES

How to Lease an HDB

A step-by-step guide to renting HDB

How to Lease a Private Property

A step-by-step guide to selling condo/landed

Do it yourself

Prefer to do-it-yourself?

Check out how our platform can help

ARTICLE CATEGORIES

HDB

All things about public housing

Private Property

All things about private property

Home Improvement

Guides for must-know reno tips

Financing

All about mortgage solutions

Towns

Singapore townships in focus

Client Stories

Success stories from customers

Founders’ Message

From the desks of Rhonda & Race Wong

Looking for a Home Loan Package?

Get the best mortgage loan rate across all banks from 1.75% fixed rate!
Share on facebook
Share on twitter
Share on email
Share on whatsapp
A woman computing her mortgage servicing ratio (MSR) and total debt servicing ratio (TDSR)

A Beginners Guide: What is Mortgage Servicing Ratio (MSR) and Total Debt Servicing Ratio (TDSR)?

Ohmyhome

Ohmyhome

Share on facebook
Share on email
Share on whatsapp

In the process of finding the best home loan package? We understand how some mortgage terms can be confusing especially for first-timers. If you’re taking a bank loan for your property purchase, there are key terms to understand when navigating the financial planning process.

The Mortgage Servicing Ratio

Mortgage Servicing Ratio (MSR) is a home loan limit imposed by the Monetary Authority of Singapore (MAS). It applies to two types of properties: HDB flats and Executive Condominiums (EC).

How does MSR work?

MSR is capped at 30% of your gross monthly income which includes employees’ CPF contribution. Your gross monthly income does not include employers’ CPF contributions.

For example, if you earn $3,500 per month, your loan eligibility is capped at $1,050 per month.

How about those with variable income?

If you have variable income (e.g. working freelance), your income counts as being 30% lower. Take 70% of your variable income for MSR calculations.

Scenario:

Alif is a full-time software engineer working in a multinational company, earning $4,000 and a freelance website developer, earning $3,000.

[Fixed Income + (70% x Variable Income)] x 30% = MSR

[$4,000 + (70% x $3,000)] x 30%
= ($4,000 + $2,100) x 30%
= $6,100 x 30%
= $1,830

Alif’s loan eligibility is capped at $1,830 per month.

Total Debt Servicing Ratio (TDSR)

Total Debt Servicing Ratio (TDSR) is also a home loan limit implemented by MAS. It applies to both public and private properties.

How does TDSR work?

TDSR sets limits on how much a home buyer can borrow. It is capped at 60% of your gross monthly income. This aims to encourage prudent borrowing by households and strengthen credit underwriting standards by financial institutions.

Financial institutions must ensure that borrowers’ monthly repayment for all debts does not exceed 60% of their monthly income. This includes the mortgage, credit card bills, car loans, personal loans, and so on.

How about those with variable income?

You cannot use 100% of this income, your income is considered 30% lower. Take 70% of your variable income for TDSR calculations.

Scenario:

Michelle, a freelancer, earns $7,000 a month with an existing car loan of $1,000.

[(70% of variable income) x 60%] – outstanding loans = TDSR

= [(70% x $7,000) x 60% – $1,000)] = ($4,900 x 60%) – $1,000
= $2,940 – $1,000
= $1,940

Michelle’s maximum home loan is capped at $1,940 per month.

What is the difference between MSR and TDSR?

MSR limits the amount of money you can borrow based on your income, without considering other loans you might have. TDSR takes into account ALL your loan repayments, including outstanding non-mortgage loans.

If you’re buying an HDB or EC with a bank loan, you need to pass both criteria – MSR calculations followed by TDSR calculations.

Scenario:

Clarence earns a fixed $5,000 monthly salary with a car loan of $1,000 and a study loan of $800.

First Criteria: MSR

Fixed Income x 30% = MSR

$5,000 x 30%
= $1,500

Clarence’s loan eligibility is capped at $1,500 per month.

Second Criteria: TDSR

Fixed Income x 60% = TDSR

$5,000 x 60%
= $3,000

Clarence’s monthly repayment for all debts cannot exceed $3,000.

Clarence’s outstanding loans:
$1,500 (MSR) + $1,000 (car loan) + $800 (study load) = $3,300.

Clarence’s bank loan can’t be approved because he did not pass the second criteria – his outstanding loans are more than $3,000. For such cases, you can reduce your obligations to pass the criteria for TDSR, i.e. Take a lower loan amount or do pledging to borrow a higher loan amount.

You may be wondering, why were these two terms introduced? Both MSR and TDSR were implemented to prevent over-leveraging. There was a problem with people taking huge home loans that they couldn’t afford. Another issue was the rising cost of property because since there were no loan restrictions, investors kept purchasing more properties.

The good news is, you can pass the criteria for MSR and TDSR in various ways, such as making a bigger down payment or buying a less expensive property. Always be prudent in your financial planning. Here’s our free Affordability Calculator to get you started!


Get Ohmyhome’s complimentary mortgage advisory service

Need more assistance in deciding on a home loan package that best suits your needs? Talk to our unbiased mortgage experts who will find you the best home loan rates across all the banks in Singapore, for free!

Call 6886 9009 today.

Subscribe Now

Get a notification every time we upload a new blog post.

Looking for a Home Loan Package?

Get the best mortgage loan rate across all banks from 1.75% fixed rate!

Featured Blogs

Highlighting unique property views for every Singaporean

get an agent

Buy with an Agent

Dedicated experts at your service

Documentation Services

Leave the paperwork to us

Do it yourself

Browse New Launch Condos

Find new units for sale

Prefer to do-it-yourself?

Check out how our platform can help

Browse Resale Properties

Download the app and speak directly to sellers

RESOURCES

Affordability Calculator

Calculate required tax for selling

Calculate Buyer’s Stamp Duty

Find the amount payable when buying

How to Buy an HDB

A step-by-step guide to buying HDB

How to Buy a Private Property

A step-by-step guide to buying condo/landed

bUY OVERSEAS

get an agent

Sell with an Agent

Dedicated experts at your service

Documentation Services

Leave the paperwork to us

do it yourself

Prefer to do-it-yourself?

Check out how our platform can help

Post a Listing for Free

Download the app and connect with buyers

RESOURCES

Free Home E-Valuation

Know the value of your property in seconds!

Calculate Seller’s Stamp Duty

Find the amount payable when selling

How to Sell an HDB

A step-by-step guide to selling HDB

How to Sell my Private Property

A step-by-step guide to selling condo/landed

get an agent

Rent with an Agent

Dedicated experts at your service

do it yourself

Prefer to do-it-yourself?

Check out how our platform can help

Browse Rental Listings

Download the app and connect with landlords

RESOURCES

How to Rent an HDB

A step-by-step guide to renting HDB

How to Rent a Private Property

A step-by-step guide to renting condo/landed

get an agent

Lease with an Agent

Dedicated experts at your service

Lease Documentation

Leave the paperwork to us

do it yourself

Prefer to do-it-yourself?

Check out how our platform can help

Post a Listing for Free

Download the app and connect with tenants

RESOURCES

How to Lease my HDB

A step-by-step guide to renting out an HDB

How to Lease my Private Property

A step-by-step guide to renting out condo/landed

FEATURED ARTICLES

Ohmyhome Raises US$5M in Series A+ Funding

Ohmyhome, the leading Property 
One-Stop Shop Platform

ARTICLE CATEGORIES

HDB

All things about public housing

Private Property

All things about private property

Home Improvement

Guides for must-know reno tips

Financing

All about mortgage solutions

Towns

Singapore townships in focus

Client Stories

Success stories from customers

Founders’ Message

From the desks of Rhonda & Race Wong

Social media

Other