How to calculate how much can you loan for your first property? (INFO)

For example;
Purchased property: $500k HDB
Max tenure: 25 years (maximum tenure)
Loan amount: $400k (maximum loan at 80%)
The max tenure is 25 years or till age 65, whichever lower.
So assuming you're 35 years old, you can loan up to 25 years.
45 years old will mean that you can only loan up to 20 years.

Loan amount
For a loan amount of $400k at 25 years tenure, adding on to the 3.5% regulated stress test.
Monthly instalment will be $2,002.49.
HDB bank loan will have two hurdle you'll have to go through;

1) Mortgage Servicing Ratio (MSR)
2) Total Debt Servicing Ratio (TDSR)

MSR is 30% of your income while TDSR is 60%. You'll have to pass through both in order to be qualifed for the required loan amount.

For example;

If Alex's monthly gross income is $5,000.00
30% will be $1,500.00 which falls $502.49 short. Therefore, his gross income has to be approximate $6,675.00 in order to qualify for it.
Now that you've passed by the first important hurdle of MSR, you'll then be able to tackle TDSR which is 60%.
TDSR stands for all your outstanding liability, (Credit card bills, car loans, study loans, personal loans, etc) Note that the bank only takes in those that are with financial institutions, meaning if your car loan is not with any banks, it frees up more space for other liabilities.

For example;

Alex has 5 credit card bills from 5 different bank amounting to more than $5k in total, but the minimum payment due is only $200 from each bank. It means his liabilities is $200 x 5 = $1,000.
Now, Alex has car loans which amounts to $800 monthly with DBS bank. His liability increase from $1,000.00 to $1,800.00. Assuming he does not have any other liabilities, that shall be the final debt outstanding.
Income: $5,000.00
Debt: $1,800.00
Monthly Instalment: $2,002.49
Total Debt Servicing will be $3,802.49 which is approximately 76%, exceeding by 16%.
His car loan is $800 which is hard to negotiate out as liability unless he sells it, so the next option will be looking at the minimum sum for the credit card. if he can repay $802.49 from the outstanding $1,000.00, his debt will become $3,000.00 which will makes him qualified for the loan at 60%. (This is very tight though, so is better if he can clear out all his outstanding credit card bills monthly on time. Otherwise credit rating will be affected as well.)


Common myth is that if you spent alot on your credit card, you'll be unable to get a loan easily or loan amount will be lowered. It is only if you don't pay up then will be affected, as long as you clear your monthly bills on time to zero, you won't have any issue getting your loan as long as your income can match the loan amount.

As for private residential property, it is even easier. Your loan tenure can be higher to 30 years or 65 of age, whichever lower. You just have to fulfill TDSR requirement, you'll be able to loan the amount you want as long your income can match it.