Total Debt Servicing Ratio (TDSR)
Definition
A regulatory cap restricting the monthly debt repayments of property buyers to a maximum percentage of monthly income.
Key Takeaways
- TDSR limits a borrower's total monthly debt payments to 55% of their gross monthly income.
- Covers all outstanding debt obligations, including housing loans, car loans, and credit card balances.
- Applies to all home loans issued by financial institutions in Singapore.
- Variable income is subject to a 30% hair-cut deduction for debt service calculations.
Detailed Explanation
The Total Debt Servicing Ratio (TDSR) is a regulatory framework introduced by the Monetary Authority of Singapore (MAS) to prevent over-leveraging among property buyers. It restricts the maximum percentage of a borrower's gross monthly income that can be spent on total monthly debt repayments (including home loans, car loans, credit cards, and personal loans) to 55%.
TDSR applies to all housing loans granted by financial institutions in Singapore. For variable income (like commissions or rental), only 70% of the gross amount is counted towards the income assessment. Furthermore, for joint applications, a income-weighted average age is used to determine the maximum loan tenure.