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Guide to loan eligibility for HDB purchase

hdb-908121_640Be it BTO or buying from resale market, knowing how much you can borrow makes your HDB purchase planning much easier and you can also avoid costly mistakes.

Bank HDB loan eligibility is based on MSR (Mortgage Servicing Ratio) 30% and TDSR (Total Debt Servicing Ratio) 60%. Maximum loan tenure is capped at age 65 or 25 years whichever is earlier.

MSR would means a maximum of 30% of your combined income can be used to service the mortgage loan.

TDSR would be calculated based on (combined debt of applicant/s + the commitment of the new mortgage loan) < 60%


Here’s an example of this works.

Alan and his wife both age 40 earns a combined income of $6000 a month, Alan has a car loan of $1500 a month, his wife is paying $500 a month for 2 personal loans.

Total Debt: $2000debt-1157824_640

60% of Gross Income $6000 = $3600

Amount available for mortgage loan = $3600 – $2000 (debt) = $1600

*Instalment for loan assessment is based on 3.5% stress test mandated by MAS.

Working backwards, Alan and his wife would qualify for a mortgage loan of $320,000. If Alan and his wife did not have any existing debts, they would qualify for a loan amount of $359,000.


Employee – How to compute your income for the table below

Only include your basic salary and fixed allowances e.g transport allowance, hand phone allowance etc. Do not include any reimbursement amounts, inconsistent allowances, e.g March Allowance $500, April $230, May $$400 or any commissions eligible or any AWS or performance bonus etc. Reason is that any variable income components would only be taken at 70%, there is a different way to compute which we will not go into today.

Combined Salary per month (Employed)Age 40 belowAge 45Age 50Age 55

*  based on maximum loan tenure eligible

Self-Employed – Based on the latest IRAS Notice of Assessment (NOA), IR8A not accepted. Company Dividends not counted as income.

Combined Annual Declared IncomeAge 40 belowAge 45Age 50Age 55

*  based on maximum loan tenure eligible

man-742766_640The reason why self-employed person borrows lesser than employed person is because self employed income is only taken at 70%. An annual income of $84,000 works out to a monthly income of 70% * $84,000 / 12 months = $4,900

With the above tables, you can gauge how much you can borrow and make the right decisions.

If you want to know your exact loan eligibility, click here!


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