Paper 2 · Financing
Property Financing in Singapore: LTV, TDSR & MSR
Three rules decide how much a buyer can borrow from a bank. The exam tests which applies where and how they interact — the exact percentages are policy levers (confirm with MAS), but the structure is stable.
1. LTV — how much you can borrow against the value
Loan-to-Value (LTV) caps the loan as a % of the property price/value; the rest is your downpayment (part of which must be cash). LTV drops sharply for a second/third loan, and is also reduced if the loan tenure is long or extends past age 65.
| Loan | Max LTV | Min cash |
|---|---|---|
| 1st housing loan | 75% (or 55%) | 5% (25% if 55%) |
| 2nd housing loan | 45% (or 25%) | 25% |
| 3rd+ housing loan | 35% (or 15%) | 25% |
2. TDSR vs 3. MSR
| TDSR | MSR | |
|---|---|---|
| Caps | All monthly debt (loans, cards, car) | Only the housing loan |
| Limit | 55% of gross monthly income | 30% of gross monthly income |
| Applies to | All property types | Only HDB flats & ECs |
Both use a stress-test interest rate (a 'medium-term' rate higher than the actual loan rate) when computing the monthly instalment. An In-Principle Approval (IPA) indicates how much a bank is *likely* to lend — but it is not a guaranteed loan.
The trap
(1) Applying MSR to private property — MSR is HDB/EC only; private uses TDSR + LTV. (2) Forgetting LTV drops for a 2nd/3rd loan, long tenure, or age past 65. (3) Treating an IPA as a firm loan — it isn't.
Exam takeaway
Map the rule to the property: LTV + TDSR everywhere; MSR only for HDB/EC. Then check the LTV step-downs (2nd/3rd loan, tenure, age) before doing any sums.
Common questions
- Does MSR apply to private property in Singapore?
- No. The Mortgage Servicing Ratio applies only to HDB flats and Executive Condominiums. Private property financing is assessed under TDSR and LTV limits instead.
- What is the difference between TDSR and MSR?
- TDSR caps your total monthly debt (all loans) against income and applies to all property types; MSR caps only the housing loan against income and applies only to HDB flats and ECs.
Keep learning
Study material aligned to the public CEA syllabus. Not financial or legal advice — verify current figures with the relevant authority (IRAS, HDB, CEA, MAS).