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Mortgage Servicing Ratio (MSR)

MSR = Monthly Mortgage Obligation / Gross Monthly Income x 100% ≤ 30%

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Mortgage Servicing Ratio (MSR) Framework

Mortgage Servicing Ratio (MSR) is the proportion of your monthly gross income that you can spend on mortgage repayments.

MSR = Monthly Mortgage Obligation / Gross Monthly Income x 100% ≤ 30%

What You Need To Know About Mortgage Servicing Ratio (MSR):

  • A long time ago: HDB-issued loans had an MSR cap of 40% of a borrower’s gross monthly income.
  • January 2013: The MSR cap for HDB-issued loans was lowered to 35%. The MAS also set an MSR limit of 30% for bank-issued loans for HDB flats.
  • August 2013: The MSR cap for HDB-issued loans was lowered to 30%.
  • December 2013: The MSR cap of 30% was introduced for bank-issued loans for Executive Condos bought directly from property developers.
  • Currently, all HDB-issued loans and bank-issued loans for both HDB flats and ECs have an MSR of 30%.

Bank Loan Applications

  • A medium-term interest rate (currently 3.5%) is used to calculate the loan repayments.
  • Variable income, such as commission and performance-based bonuses, is taken at 70% of its value.
  • Rental income (if the borrower is a landlord), is taken at 70% of its value (need to submit stamped tenancy agreement with a minimum six months).
  • Eligible financial assets (e.g. SGD Bank deposit), must be pledged with the bank for four years.
  • The maximum loan tenure is 25 years (for HDBs) and 30 years (for ECs).
  • There is a loan-to-value ceiling of 75%.

HDB Loan Applications

  • The maximum loan tenure is 25 years, or not beyond the buyer’s age of 65 (whichever is shorter).
  • The loan is calculated based on the HDB concessionary interest rate (prevailing CPF interest rate plus 0.1%).
  • There is a loan-to-value ceiling of 90%.

How Mortgage Servicing Ratio (MSR) Applied To Your Home Loan Situation?

Monthly Gross Income30% MSR Limit
$5000$1500

The amount available to service your new monthly home loan repayments will be the difference between your other mortgage obligations and the MSR limit.

Monthly Debt ObligationsMonthly Repayments
Other Mortgage Obligations$0
Total$0

In this case, you would have $1,500 to use towards your new home loan repayments. $1,500 – $0 = $1,500

What Happens If You Exceed the 30% Mortgage Servicing Ratio (MSR)?

If your monthly home loan repayment and your other mortgage obligations surpass the 30% MSR, you’ve got several options:

You can try to extend the loan tenure so that you can lower the monthly home loan repayment.

You can buy a property with a lower price quantum so that you can reduce the amount you borrow.

You can increase the cash down-payment so that you can lower the amount you borrow.

You can sell or reduce the repayments on any other properties so that you can free up the money to use towards your new home loan repayment.

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