The two ceilings that determine a Singapore housing loan — the 55% TDSR income test and the Loan-to-Value cap — and which one usually binds.
Two separate ceilings
A Singapore housing loan is limited by two things at once. TDSR limits the loan against your income. LTV limits it against the property. The lower of the two is what the bank will actually lend.
The TDSR test
Total Debt Servicing Ratio caps total monthly debt obligations at 55% of gross monthly income. Every obligation counts: the new housing loan, existing mortgages, car loans, personal loans and credit card minimums.
Variable income such as bonus, commission, rental or freelance earnings is subject to a haircut of at least 30%, so only 70% of it counts. The instalment is assessed at the higher of the actual rate and the medium-term interest rate floor, currently 4% for residential property.
The LTV cap
Loan-to-Value caps the loan at 75% of the property value for a borrower with no outstanding housing loan, 45% with one, and 35% with two or more. Minimum cash is 5%, 25% and 25% respectively.
Where the loan tenure exceeds 30 years, or the loan runs past the borrower's age of 65, those limits tighten to 55%, 25% and 15%.
Tenure and joint borrowers
Maximum tenure is 35 years for private property. For joint borrowers, tenure runs to age 65 on the income-weighted average age rather than the older applicant's age, so the income split between applicants directly affects both tenure and quantum.
Which one binds
For a first-time buyer with solid income, the LTV cap usually binds — the income could support more, but the bank will not lend beyond 75%. For a buyer already servicing a loan, or carrying other debt, TDSR typically binds first.
Knowing which is the constraint tells you what would actually change the answer. Clearing a car loan helps if TDSR binds, and does nothing if LTV binds.
The TDSR calculator computes both and reports which is binding. The housing loan information page sets out the rules for Impressions at Dairy Farm.