Explainers
Published Date: 05 July 2018

Rules for New Housing Loans

Rules for financial institutions (FIs) on new housing loans, including maximum limits on loan tenure, loan-to-value ratio, mortgage servicing ratio and total debt servicing ratio.

Overview

Property loans can be large, long-term liabilities for most individuals and households. Maximum limits on loan tenures and amounts help to ensure that borrowers don’t overstretch themselves when purchasing property.

The objectives of the housing loan rules are to:

  • Encourage financial prudence among borrowers.
  • Prevent borrowers from circumventing LTV limits and TDSR thresholds.
  • Ensure long-term household economic health.
  • Strengthen credit underwriting standards at FIs.
  • Ensure long-term stability in the property market.

Housing Loan Rules

Below is a summary of the rules on maximum limits for new housing loans.

Rule Description
Loan Tenure 
  • 30 years for HDB flats.
  • 35 years for non-HDB properties.
Loan-to-Value (LTV)  The maximum amount that an individual can borrow for a housing loan based on the loan tenure, borrower’s age, borrower’s existing loans and whether the borrower is a shell company.
Mortgage servicing ratio (MSR) 

No more than 30% of a borrower’s gross monthly income should go towards repaying all their property loans, including the loan being applied for.

Only applies to the purchase of HDB flats and ECs.

Total debt servicing ratio (TDSR)  No more than 60% of a borrower’s gross monthly income should go towards repaying all their debt obligations, including the loan being applied for.

In addition, FIs must also: