What is the TDSR?
The Total Debt Servicing Ratio (TDSR) is a framework introduced by MAS to ensure borrowers do not take on more debt than they can handle. It limits total monthly debt obligations — including the property loan, car loans, credit card debt and other loans — to 55% of gross monthly income.
How is it calculated?
Add up all monthly debt repayments (existing and the proposed new loan) and divide by gross monthly income. If the result exceeds 55%, the bank cannot grant you the loan at the requested amount.
What counts as debt?
All credit facilities are included: mortgage loans, car loans, student loans, credit card outstanding balances (assessed at 5% of the outstanding balance per month), and personal loans.
Planning around the TDSR
Clearing outstanding debts before applying for a home loan improves your TDSR headroom significantly. Consider paying down car loans and credit card balances before your property purchase.