Everything about Income and Loan Requirements for Your 1^st Condo

First-time home buyers face many questions with regards to income and loan requirements when buying their condo. This article will attempt to help you understand the different loan aspects in simple terms when buying a private property.

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     Table of Content

• Loan Amount, Tenure & Age
• MSR vs TDSR
• How to take Higher Loans

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    📌1. Minimum & Eligible Income

• For private properties, a minimum income of S$24,000 or a combined income of S$36,000 per annum is required.
• Rental, Bonus and commission can be included as part of your income.
• However, banks will apply a 30% haircut on these non-regular income source and also for self-employed persons.

    📌2. Loan Amount, Tenure & Age

• You will need minimum 5% cash to buy a condo.
• The maximum bank loans allowed is capped at 75%
• Minimum age required for loans is 21 years and not older than 65.
• The longest loan period is 30 years and this will get shorter as we age beyond 35.
• That is why 35 is the golden number.

    📌3. TDSR vs MSR

• Private Properties adhere to Total Debt Servicing Ratio (TDSR).
• Mortgage Servicing Ratio (MSR) is for HDB.
• Note that Executive Condo (EC) buyers will need to meet both MSR and TDSR requirements.
• With TDSR, you cannot use more than 55% (updated as of June 2022) of your gross monthly income to pay your monthly loans.

    📌4. How to take Higher Loans

• The objective of TDSR is to encourage buyers to be prudent and not take excessive loan
• As such, the interest rates to calculate TSDR is based on 4% (Revised from 3.5% to on 30 Sept 22) and not prevailing interest rates.
• This impacts the maximum amount of loan that you can take from banks.

• For example, under the current TDSR, you will need minimum monthly income of about $8,700 to qualify for a $1million bank loan (assuming there are no other debts)
• Under the MAS Notice 645, you can include your cash, fixed deposits or shares to be recognised as part of your gross monthly income.
• Buyers whose income fall short can use pledging or show-cash methods to improve their TDSR and take higher loans

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