Your Mortgage and Your Cash Flow

The bank tells you the most you can borrow. Your cash flow should tell you how much you should.

A mortgage shapes your monthly cash flow for decades, so the size of the loan deserves more thought than "what will the bank approve?" In Singapore, regulators set two limits that decide the maximum (rules as at June 2026; verify on the MAS website).

The Total Debt Servicing Ratio (TDSR) caps all your monthly debt repayments — home loan, car loan, personal loans — at 55% of your gross monthly income. The Mortgage Servicing Ratio (MSR), which applies to HDB flats and new Executive Condominiums, caps just the home-loan repayment at 30% of gross income. Banks also stress-test your loan at a minimum assumed interest rate (a 4% floor) and count variable income, such as bonuses, at only 70%.

Here is the trap: these are legal ceilings, set to stop reckless borrowing — not recommendations. Borrowing right up to 55% of gross income leaves almost no room for saving, investing, or a rate rise. A prudent target is well below the cap: many advisers suggest keeping total housing costs nearer a quarter of take-home pay, so that a job change, a higher renewal rate, or a new child does not turn the mortgage into a monthly emergency.

Borrow against your cash flow, not against the ceiling. The goal is a home you can carry easily in a bad year, not just one you can scrape into in a good one.

Illustrative example: caps vs a prudent target

The chart shows the two regulatory ceilings beside a more conservative personal target. The caps mark the edge of what is allowed; a sensible borrower aims comfortably inside them, leaving room for life and for rates to rise.