How to Calculate Your Total Debt Servicing Ratio Before Applying for a Loan

The Total Debt Servicing Ratio (TDSR) is a regulatory cap that limits a borrower’s monthly debt repayments to 55% of gross monthly income. Imposed by the Monetary Authority of Singapore (MAS) and still in force in 2026, it determines the maximum loan quantum for property purchases and refinancing. In 2025, 31% of all mortgage application rejections were traced directly to TDSR breaches, according to Credit Bureau Singapore’s loan origination data. A precise self-calculation before approaching a lender allows you to adjust your debt load, present a compliant application, and avoid a hard inquiry that can ding your credit score.

Breaking Down the TDSR Formula

TDSR is expressed as a percentage: total monthly debt obligations ÷ total gross monthly income × 100. The numerator captures every recurring payment you are contractually bound to make, while the denominator aggregates all verifiable income streams. The 55% threshold is a hard stop—any ratio above 55% will result in an automatic rejection for a property loan. Even if the ratio falls beneath the cap, banks apply additional stress tests, but passing the TDSR hurdle is non-negotiable.

Assembling Your Gross Monthly Income

Income components differ markedly in how they are weighted. Fixed salary, contractual allowances, and other regular, verifiable payments are counted at 100%. For variable income—commissions, bonuses, rental proceeds without a fixed-term lease—MAS mandates a 30% haircut, meaning only 70% of the reported amount enters the denominator. Singapore Department of Statistics data for 2025 shows the median gross monthly income of employed residents was $5,197. Lenders also accept Central Provident Fund (CPF) statements and the latest Notice of Assessment to verify declared earnings. A consistent two-year track record is expected; income spikes in a single year are smoothed.

The 30% Haircut on Variable Income

The 30% discount applies to any income that is not fixed and guaranteed. This includes freelance earnings, overtime pay, year-end bonuses, sales commissions, and rental income from properties that are not backed by a fixed-term tenancy agreement. For example, if your commission income for the past year averaged $3,000 per month, only $2,100 (70% × $3,000) can be included in your total income for TDSR calculation. The haircut is designed to safeguard against income volatility and ensure borrowers can still service their debts during leaner months. When you prepare your documents, highlight the stable portion of your variable income and ensure you have bank statements and tax records covering at least two consecutive years.

Listing Your Monthly Debt Obligations

Every recurring debt commitment must be declared, regardless of the lender or tenure. Common items include:

• Housing loans: Monthly instalment for all existing property loans, plus the new loan you are applying for.
• Car loans: Monthly payments, even if the car is pledged as collateral.
• Personal loans and credit lines: The contractual monthly repayment or 3% of the outstanding balance, whichever is higher.
• Credit card debt: The minimum payment due each month, or 3% of the statement balance, whichever is greater.
• Overdrafts and other secured facilities: The minimum monthly payment.
• Guarantor obligations: If you are a guarantor for another person’s loan, the full monthly instalment is counted unless the primary borrower has been making payments for more than six months and can prove the ability to continue doing so.

All obligations are summed to form the numerator of the TDSR formula.

Working Through a Sample Calculation

Assume a borrower earns a fixed monthly salary of $6,000 and variable commissions averaging $2,000 per month. After the 30% haircut, the included income is $6,000 + (0.70 × $2,000) = $7,400. Existing monthly debt commitments are a car loan ($800), a personal loan ($400), and minimum credit card payments ($200). The total current debt is $1,400. They want to take on a new housing loan with a monthly instalment of $2,500. The proposed total debt would be $1,400 + $2,500 = $3,900. TDSR = $3,900 / $7,400 = 52.7%, which is just under the 55% limit. If the housing loan instalment were $2,800, the ratio would rise to 56.8% and trigger a rejection. Always include the new loan’s instalment in the calculation.

FAQ

What happens if my TDSR exceeds 55%?

Your loan application will be rejected automatically. You must reduce existing debts, increase verifiable income, or opt for a smaller loan quantum to bring the ratio below 55%.

Does TDSR apply to all property loans?

Yes, TDSR applies to all property loans in Singapore, including purchases of HDB flats, private residential properties, commercial and industrial properties, as well as refinancing cases.

Are joint borrowers’ incomes combined differently?

When a loan has multiple borrowers, the income is pooled and the total debt obligations of all borrowers are combined. Each borrower’s variable income still receives a 30% haircut before being added to the pool.

How are rental income and investment income treated?

Rental income from an existing property is considered variable unless backed by a valid, fixed-term tenancy agreement. If the tenancy is fixed-term, the net rental income (after deducting expenses) can be recognised at 100%. Otherwise, a 30% haircut applies. Dividends, interest income, and other investment returns are generally not accepted as stable income for TDSR purposes unless they come from a consistently recurring source and can be documented over several years.

Can I appeal a TDSR rejection?

MAS guidelines are strict, but some banks may exercise limited flexibility under exceptional circumstances. You would need to present strong compensating factors, such as substantial liquid assets or a clean credit history, and the final decision rests with the financial institution’s credit department.

How does the TDSR framework interact with the Mortgage Servicing Ratio (MSR)?

The MSR applies only to loans for HDB flats and executive condominiums, capping the monthly mortgage repayment at 30% of the borrower’s gross monthly income. The TDSR is a broader cap that applies to all property loans and includes all debt obligations. Both must be satisfied concurrently where applicable.

References

• Monetary Authority of Singapore. (2013). Total Debt Servicing Ratio framework for property loans. Retrieved from https://www.mas.gov.sg
• Credit Bureau Singapore. (2025). Loan origination and default statistics. Singapore: Credit Bureau (Singapore) Pte Ltd.
• Singapore Department of Statistics. (2025). Key household income trends, 2025. Retrieved from https://www.singstat.gov.sg
• Association of Banks in Singapore. (2024). Industry guidelines on TDSR computation. Retrieved from https://www.abs.org.sg