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Understanding Loan-To-Value (LTV) Limit & Total Debt Servicing Ratio (TDSR) When Purchasing A Property In Singapore

LTV Limit & TDSR tells us what we can (and cannot) afford.

Singaporeans love properties. As of 2019, more than 9 out of 10 Singaporean households own their own property. For most of us, buying a property is likely to be the biggest purchase we will make in our lives.

With HDB flats in Singapore costing at least a few hundred thousand dollars and private condominium apartments easily costing a million dollars or more, buying a property in Singapore is anything but cheap. This is why most buyers will need to take a mortgage to fund their property purchase.

However, taking out a mortgage isn’t as simple as finding a bank that is willing to loan us the money we need. We also have to be aware of two important regulations that have to be met. These are the Loan-To-Value (LTV) Limit and the Total Debt Servicing Ratio (TDSR).

What Is The Loan-To-Value (LTV) Limit?

As explained by the Monetary Authority of Singapore (MAS), Loan-To-Value (LTV) refers to the loan amount as a percentage of the property’s value. For example, if we purchase a condominium apartment for $1,000,000 and take a loan of $750,000, the LTV is 75%.

As of 6 July 2018, the LTV limits for property purchases in Singapore are as such.

Outstanding Housing Loans LTV Limit Minimum cash down payment
None 75% or 55% 5% (for LTV of 75%)
10% (for LTV of 55%)
1 45% or 25% 25%
2 or more 35% or 15% 25%


If we have no existing housing loans, the LTV limit is 75%. The more housing loans we have, the lower our LTV limit will be. If we have one existing housing loan, our LTV limit will be 45%.

For the LTV Limit, there are two figures — a higher and a lower percentage. If the loan tenure exceeds 30 years (or 25 years for HDB flats), or if the loan period extends beyond the borrower’s age of 65, then the lower LTV limit (i.e. 55%) will apply. For example, a 50-year-old buyer with no existing housing loan taking a 20-year mortgage will have an LTV limit of 55%.

Loan-To-Value (LTV) Applies To Our Property’s Value, Not Necessarily Our Purchase Price

Another important point to know is that the LTV limit is based on the assessed property’s value, and not necessarily the purchase price of a property. So, if we purchase a private property for $1.10 million but the property is later valued to be $1 million, the 75% LTV will apply to $1 million, and not our purchase price of $1.10 million. This means the bank can only loan us $750,000, with the remaining $350,000 paid using a combination of cash and CPF.

Read Also: What Happens When You Buy A Property Above or Below Valuation?

How Total Debt Servicing Ratio (TDSR) Affects How Much You Can Borrow

While the LTV limit tells us how much the banks can lend us, the Total Debt Servicing Ratio (TDSR) calculates how much we can borrow from the bank. The two amounts are not always the same. Just because a bank can lend us doesn’t necessarily mean we qualify to receive the full loan amount.

As explained by MAS, the Total Debt Servicing Ratio (TDSR) refers to the portion of a borrower’s gross monthly income that goes towards repaying the monthly debt obligations, including the loan being applied for. A borrower’s TDSR should be less than or equal to 55% (this was reduced from 60% with effect from 16 December 2021)

For example, an individual who purchases a private property with a gross monthly income of $6,000 should not have monthly debt obligations that exceed $3,300 (55% of the monthly income). This doesn’t just apply to housing loans, but all other kinds of loans that the individual takes such as car loans, renovation loans, student loans and credit card loans.

With a bit of arithmetic, we can (and should) calculate for ourselves how much we can borrow before actually applying for any new loans.

Assuming we earn a salary of $6,000, our TDSR should not exceed $3,300 a month. If we already have an existing car loan repayment of $1,000, this means our monthly mortgage repayment cannot exceed $2,300. If we take a $600,000 loan, with a loan tenure of 25 years and an interest rate of 2.6%, our monthly mortgage repayment will be $2,722, which exceeds the 55% TDSR. Hence, we won’t qualify for the loan. This should be something that we consider before we proceed ahead to purchase a property.

However, if we can clear our car loan first, this will free up our monthly debt obligations to borrow more for our property purchase. After clearing our car loan, we will be able to borrow up to $3,300 — allowing us to be qualified for the housing loan we need.

Read Also: Understanding Total Debt Servicing Ratio (TDSR) – And How It Affects Your Personal Finance Decision

One way to still meet the TDSR requirement without lowering the amount we wish to borrow is to stretch the tenure of our housing loan.

While this is a viable option, we must also remember that having a longer loan tenure not only increases the total interest costs that we incur, but may also mean that our LTV limit will go down. Remember, if the loan tenure exceeds 30 years (or 25 years for HDB flats), or if the loan period extends beyond the borrower’s age of 65, then the LTV limit will be lower.

Another aspect that affects our TDSR is the interest rate. With effect from 30 September 2022, the interest rate floor used to compute the Total Debt Servicing Ratio (TDSR) and Mortgage Servicing Ratio (MSR) for housing loans issued by financial institutions is raised by 0.5%.

Mortgage Servicing Ratio (MSR) Also Apply To HDB Flat

If we buy an HDB flat or executive condominium, we will also need to meet the Mortgage Servicing Ratio (MSR) requirements. According to MAS, MSR refers to the portion of a borrower’s gross monthly income that goes towards repaying all property loans, including the loan being applied for. MSR is capped at 30% of a borrower’s gross monthly income.

As of 30 September 2022, a new interest rate floor of 3% was introduced to compute the eligible loan amount. While this would not change the interest rate charged, it would reduce the maximum we can borrow.

For example, assuming you want to take a $300,000 loan from HDB, the actual interest rate charged will be 2.6% which is a monthly repayment of about $1,360. This translates to an income of about $4,530, with 30% MSR. However, HDB will take the interest rate of 3% to compute the monthly repayment of about $1,420 and use it to determine the maximum loan you can borrow under the MSR. Your income would need to be $4730, $200 more than before, to borrow the same amount.

Higher Loan-To-Value (LTV) Limit For HDB Housing Loan

For HDB flats bought using an HDB Housing Loan, the LTV limit is higher at 80% (it was 85% before 30 September 2022). In other words, the minimum down payment we need to make will be lower because HDB can offer us a loan of up to 80% of the property purchase price, or valuation, whichever is lower.

Read Also: 6 Reasons You Should Still Choose An HDB Home Loan Over A Bank Home Loan (Even Though HDB Interest Rates Are Higher)

As we can see, finding the right home that we want and getting it at the right price is not the only thing that we need to be concerned about when buying a property. To make sure that we can complete the transaction for our dream property, we should always first ensure that we can meet both the LTV limit and the TDSR requirement.

Cover image credit: Raymond Quek

This article was first published on 25 May 2021 and has been updated with the latest property cooling measures announced on September 2022

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