
If you’re considering taking out a loan or mortgage in Singapore, it’s essential to understand the Debt to Income Ratio in Singapore (DTI) concept. Lenders use this ratio to determine your ability to repay the loan, and it’s necessary to know how it works to make informed decisions about your finances.
In this article, we’ll explain everything you need to know about DTI in Singapore, including the Total Debt Servicing Ratio (TDSR) framework, the Mortgage Servicing Ratio (MSR) for HDB flats, factors affecting loan eligibility and repayments, managing your debt, and regulatory measures and their effects on borrowing.
DTI is a simple concept that compares your monthly debt payments to your monthly income. This ratio is expressed as a percentage and is used by lenders to assess your ability to make repayments on a loan.
In Singapore, the TDSR framework is used to determine your DTI. It requires that your total monthly debt payments, including your new loan, do not exceed 60% of your gross monthly income. If you earn $5,000 monthly, your total monthly debt payments, including your new loan, should not exceed $3,000.
Understanding DTI is essential when applying for a loan or mortgage in Singapore. It’s important to know how the TDSR framework works, what factors affect loan eligibility and repayments, and how to manage your debt to stay within the TDSR limit. By visiting informed about regulatory measures and their effects on borrowing, you can make informed decisions about your finances and avoid getting into financial trouble.
Understanding Debt to Income Ratio in Singapore

If you’re looking to take out a loan in Singapore, understanding your debt to income ratio is crucial. Your debt to income ratio is a measure of how much of your income goes towards paying off your debts each month. This is important because lenders use this ratio to determine whether you’re able to repay a loan. In this section, we’ll go over the definition and importance of debt to income ratio, as well as the components that make it up.
Definition and Importance of Debt to Income Ratio
Your debt to income ratio is a ratio that compares your monthly debt obligations to your gross monthly income. This ratio is important because it helps lenders determine how much of your income is already being used to pay off debts. A high debt to income ratio indicates that you may have trouble making your loan payments, while a low debt to income ratio means that you have more income available to pay off your debts.
In Singapore, the Total Debt Servicing Ratio (TDSR) limit should be less than or equal to 55% of your gross monthly income. This means that your total monthly debt obligations, including your new loan payments, should not exceed 55% of your gross monthly income.
Components of Debt to Income Ratio
Your debt to income ratio is made up of two components: your monthly debt obligations and your gross monthly income.
Your monthly debt obligations include all of the recurring monthly debts under you, such as mortgages, car loan payments, credit card balances, student loans, etc. Use the minimum deposit amount when adding your total monthly debt.
Your gross monthly income is your total income before any deductions, such as taxes or insurance premiums, are taken out. This includes your salary, bonuses, and any other sources of income.
To calculate your debt to income ratio, divide your monthly debt obligations by your gross monthly income and multiply by 100. For example, if your monthly debt obligations are £1,500 and your gross monthly income is £5,000, your debt to income ratio would be 30%.
In conclusion, understanding your debt to income ratio is crucial when taking out a loan in Singapore. Make sure to calculate your percentage before applying for a loan to ensure that you’re able to make your loan payments on time.
Debt to Income Ratio in Singapore: The Total Debt Servicing Ratio (TDSR) Framework

If you are planning to take out a property loan in Singapore, it is essential to understand the Total Debt Servicing Ratio (TDSR) framework. This framework was introduced in 2013 by the Monetary Authority of Singapore (MAS) to ensure that borrowers do not take on excessive debt that they cannot afford to repay.
TDSR Calculation and Guidelines
TDSR is a calculation of the percentage of your income that goes towards repaying your existing loans, including the loan you are applying for. The maximum TDSR threshold for property loans is set at 60% of your gross monthly income, and it is calculated based on the following formula:
TDSR = (Total monthly debt obligations / Gross monthly income) x 100%
The formula takes into account all of your monthly debt obligations, such as credit card bills, car loans, and personal loans, in addition to the proposed property loan.
Impact of TDSR on Property Loans
The TDSR framework has a significant impact on property loans in Singapore. All financial institutions (FIs) are required to calculate the TDSR for every borrower and ensure that the borrower’s TDSR is less than or equal to 60%. If your TDSR exceeds the threshold, the FI may reject your loan application or offer you a smaller loan amount.
TDSR Exceptions and Exemptions
There are some exceptions and exemptions to the TDSR framework in Singapore. For example, if you are refinancing your existing property loan, you may be exempted from the TDSR threshold. Additionally, if you are purchasing a property that is under construction, the TDSR threshold may be higher.
It is important to note that even if you are exempted from the TDSR threshold, the FI will still assess your ability to repay the loan based on your income and other factors.
In conclusion, the TDSR framework is an essential aspect of property loans in Singapore. By understanding the TDSR calculation and guidelines, the impact of TDSR on property loans, and the exceptions and exemptions to the TDSR framework, you can make an informed decision when applying for a property loan.
Debt to Income Ratio in Singapore: The Mortgage Servicing Ratio (MSR) for HDB Flats

If you are planning to buy an HDB flat in Singapore, you need to understand the Mortgage Servicing Ratio (MSR). The MSR is a measure of how much of your gross monthly income can be used to repay your housing loan. It is one of the key factors that lenders consider when deciding whether to approve your loan application.
Understanding MSR in Singapore
The MSR is only applicable for HDB flats and Executive Condominiums (ECs) where the minimum occupation period of the executive condominium has not expired. The MSR is capped at 30% of your monthly gross income. This means that your monthly housing loan repayment cannot exceed 30% of your monthly gross income.
MSR Calculation for HDB Loans
When calculating the MSR for HDB loans, the loan repayments are calculated based on an interest rate of 2.6%, which is the prevailing CPF interest rate plus 0.1%. The maximum loan tenure is 25 years or 65 years minus the buyer’s age (whichever is shorter). The loan-to-value (LTV) is capped at 80%.
To calculate the MSR, the lender will take into account your monthly gross income, which includes your basic salary, bonuses, and other allowances. They will also consider your other debt obligations, such as car loans, credit card debts, and personal loans.
It is important to note that the MSR is not the only factor that lenders consider when evaluating your loan application. They will also look at your Total Debt Servicing Ratio (TDSR), which is the total amount of debt you have compared to your income. The TDSR is capped at 60% of your monthly gross income.
In conclusion, understanding the MSR is crucial if you are planning to buy an HDB flat in Singapore. It is one of the key factors that lenders consider when evaluating your loan application. By keeping your MSR within the allowed limit, you can increase your chances of getting your loan approved and avoid any financial difficulties in the future.
Debt to Income Ratio in Singapore: Factors Affecting Loan Eligibility and Repayments

When applying for a loan in Singapore, several factors affect your eligibility and repayment options. Understanding these factors can help you make informed decisions and increase your chances of loan approval.
Income Considerations for Loan Approval
Your income is a critical factor that lenders consider when evaluating your loan application. Lenders typically require borrowers to have a minimum gross income to qualify for a loan. The higher your income, the more likely you are to get approved for a loan.
Debt Obligations and Loan Tenure
Your monthly debt obligations and the loan tenure also affect your eligibility for a loan. Lenders use a metric called the Debt-to-Income (DTI) ratio to determine your ability to repay the loan. The DTI ratio is calculated by dividing your total monthly debt obligations by your gross monthly income. A lower DTI ratio indicates a lower risk for lenders and increases your chances of loan approval.
The loan tenure also affects your monthly repayments. A longer loan tenure means lower monthly repayments but a higher total interest paid over the loan’s life. A shorter loan tenure means higher monthly repayments but a lower real interest paid.
Credit Assessment and Credit Score
Lenders perform a credit assessment to evaluate your creditworthiness. They look at your credit history, payment behaviour, and credit score. Your credit score is a numerical representation of your creditworthiness. A higher credit score indicates a lower risk for lenders and increases your chances of loan approval.
Maintaining a good credit score requires timely payments, low credit utilisation, and a good mix of credit types. A low credit score indicates a higher risk for lenders and can result in higher interest rates, lower loan amounts, or loan rejection.
In summary, understanding the factors that affect your loan eligibility and repayments can help you make informed decisions and increase your chances of loan approval. Your income, debt obligations, loan tenure, credit assessment, and credit score all play a critical role in determining your loan eligibility and repayment options.
Debt to Income Ratio in Singapore: Managing Your Debt in Singapore

If you’re struggling with debt, there are many strategies you can use to manage it effectively. By taking a proactive approach, you can reduce your debt and improve your financial situation. Here are some tips to help you manage your debt in Singapore.
Strategies for Debt Reduction
One of the most effective ways to manage your debt is to create a debt reduction plan. This involves listing all of your debts and prioritising them based on their interest rates. It would be best if you aimed to pay off the debts with the highest interest rates first, as they are costing you the most money.
To help you pay off your debts faster, you can also consider making extra payments whenever possible. This can help you reduce the amount of interest you’re paying and get out of debt more quickly.
Refinancing and Debt Consolidation Options
Another option for managing your debt in Singapore is to refinance or consolidate your debts. This involves taking out a new loan to pay off your existing debts, which can help you reduce your interest rates and simplify your repayments.
There are many different types of loans available in Singapore, including personal loans, balance transfer loans, and debt consolidation loans. You should do your research to find the best loan for your needs and make sure you understand the terms and conditions before applying.
Financial Prudence and Planning
Finally, it’s important to practice financial prudence and planning to help you manage your debt effectively. This involves creating a budget and sticking to it, avoiding unnecessary spending, and saving money wherever possible.
You can also consider seeking professional financial advice to help you manage your debt more effectively. A financial advisor can help you create a personalised debt reduction plan and provide guidance on how to improve your financial situation.
In conclusion, managing your debt in Singapore requires a proactive approach and a commitment to financial prudence and planning. By following these tips and strategies, you can reduce your debt and improve your financial situation over time.
Debt to Income Ratio in Singapore: Regulatory Measures and Their Effects on Borrowing

If you are planning to take out a loan in Singapore, it is crucial to be aware of the regulatory measures that have been put in place to ensure responsible borrowing. These measures have been introduced by the Singapore government and financial institutions to prevent borrowers from taking on more debt than they can handle.
Singapore Government’s Cooling Measures
The Singapore government has implemented a series of cooling measures to curb the rising property prices and debt levels in the country. One of the most significant measures is the Total Debt Servicing Ratio (TDSR), which limits the amount of debt you can take on relative to your income. The TDSR takes into account all of your existing debt obligations, including credit card debt and other loans, when calculating your borrowing capacity.
Another measure is the Loan-to-Value (LTV) ratio, which limits the amount of money you can borrow relative to the value of the property you are purchasing. The LTV ratio varies depending on the type of property you are buying and whether you are a first-time buyer or not.
Loan-to-Value (LTV) Ratio and Other Regulations
In addition to the LTV ratio, there are other regulations that you need to be aware of when borrowing in Singapore. For example, financial institutions are required to conduct stress tests to ensure that you can still afford to make your loan repayments even if interest rates rise.
Banks are also required to maintain a certain level of stable funding to support their lending activities. The Monetary Authority of Singapore (MAS) has adjusted the Net Stable Funding Ratio requirement to help banks focus on keeping their customers during the COVID-19 pandemic.
Overall, the regulatory measures in Singapore are designed to promote responsible borrowing and prevent borrowers from taking on more debt than they can handle. It is essential to understand these measures and how they may affect your borrowing capacity before taking out a loan.
Frequently Asked Questions
How can I calculate my Mortgage Servicing Ratio for a property in Singapore?
To calculate your Mortgage Servicing Ratio (MSR) for a property in Singapore, you need to divide your total monthly mortgage repayment by your gross monthly income. The MSR threshold is currently set at 30% by the Monetary Authority of Singapore (MAS).
What’s the latest Total Debt Servicing Ratio (TDSR) framework to know for 2023?
As of 2023, the TDSR threshold is set at 60% for property loans. This means that your total monthly debt obligations, including your mortgage repayment, cannot exceed 60% of your gross monthly income.
It’s important to note that the TDSR framework applies to all types of property loans, including HDB loans.
Are there differences between MSR and TDSR when buying a flat from HDB?
Yes, there are differences between MSR and TDSR when buying a flat from HDB. While the MSR threshold is set at 30% for HDB loans, the TDSR threshold is set at 60%. This means that your total monthly debt obligations, including your HDB loan repayment, cannot exceed 60% of your gross monthly income.
Does the TDSR threshold affect eligibility for HDB loans?
Yes, the TDSR threshold affects eligibility for HDB loans. You need to meet the TDSR threshold of 60% to be eligible for an HDB loan. This means that your total monthly debt obligations, including your HDB loan repayment, cannot exceed 60% of your gross monthly income.
What counts towards my debt when figuring out my debt-to-income ratio?
When figuring out your debt-to-income ratio, you need to consider all of your monthly debt obligations, including your mortgage repayment, car loan payment, credit card balance, student loans, and any other recurring monthly debts.
Use the minimum repayment amount when adding up your total monthly debt.
What’s considered an ideal debt-to-income ratio to aim for in Singapore?
As a rule of thumb, a debt-to-income ratio of 36% or lower is often considered good. However, the ideal debt-to-income ratio can vary depending on individual circumstances.
It’s essential to keep your debt-to-income ratio as low as possible to ensure that you can comfortably manage your debt obligations and maintain a healthy financial status.