Simulated case study: a hypothetical scenario to illustrate the rules. Not a real client or transaction. Figures as at 10 October 2026.
Before paying a 1% option fee on a S$2.2 million resale condo, a simulated couple check whether the Total Debt Servicing Ratio (TDSR) lets them borrow the full 75%. Under these assumptions, they can: TDSR supports about S$1.88 million, above the S$1.65 million loan-to-value cap. But if their bonus could not be counted, or their car loan were larger, the answer changes, and a shortfall would put the S$22,000 option fee at risk.
The situation
Wei (36) and Jia (34) are a married couple, both Singapore Citizens, buying their first home. They own no other property and have no housing loan.
| Household profile | Value (assumed) |
|---|---|
| Combined fixed gross salary | S$17,000 a month |
| Jia's variable bonus, 12-month average | S$4,500 a month |
| Car loan instalment | S$1,800 a month |
| Credit card minimum payments | S$300 a month |
| Target property | Resale condominium, S$2,200,000, valued at S$2,200,000 |
| Proposed option money | 1% (S$22,000), with a two-week option period |
| Proposed loan tenure | 30 years (income-weighted average age about 35, so the loan ends before 65) |
The rules that apply
| Rule | Setting | Effective | Source |
|---|---|---|---|
| TDSR | All monthly debts at most 55% of gross monthly income | 16 Dec 2021 | MAS: MSR and TDSR rules |
| Stress-test rate | Higher of 4% or the bank's "thereafter" rate, on the new loan | 30 Sep 2022 | MAS: Calculating TDSR |
| Variable income | Minimum 30% haircut, averaged over 12 months | Current | MAS |
| Other debts | All outstanding debts count; minimum payment for unsecured revolving credit | Current | MAS |
| Loan-to-value | 75% with no other housing loan, tenure up to 30 years and not past age 65 | 6 Jul 2018 | MAS: LTV limits |
| Minimum cash | 5% of the price | 6 Jul 2018 | MAS |
| Option money if not exercised | Forfeited to the seller | CEA template OTP (version 1.2, Feb 2021) | CEA: Buying or selling a private residential property |
| Buyer's Stamp Duty | Tiered, 1% to 6% | 15 Feb 2023 | IRAS: BSD) |
The numbers
Assumptions
| Input | Value |
|---|---|
| Recognised variable income | 70% x S$4,500 = S$3,150 |
| Stress rate | 4% a year, 30 years |
| Monthly payment per S$1 of loan at 4% over 30 years | 0.0047742 |
| Actual loan rate (for budgeting only) | 2.03%: 3-month compounded SORA of 1.23% on 8 Oct 2026 plus an assumed 0.8% spread |
Step by step
- Recognised income: S$17,000 + S$3,150 = S$20,150 a month.
- TDSR cap: 55% x S$20,150 = S$11,082.50 a month for all debts.
- Less existing debts: S$11,082.50 - S$1,800 - S$300 = S$8,982.50 available for the new home loan.
- Maximum loan on TDSR: S$8,982.50 / 0.0047742 = about S$1,881,500.
- Loan-to-value cap: 75% x S$2,200,000 = S$1,650,000. This is lower, so it is the binding limit.
- Stress-tested instalment on S$1,650,000: about S$7,877 a month, within the S$8,982.50 available.
- Actual instalment at the assumed 2.03%: about S$6,124 a month.
- Upfront money: 25% downpayment = S$550,000 (at least S$110,000 in cash); BSD = S$1,800 + S$3,600 + S$19,200 + S$20,000 + 5% x S$700,000 (S$35,000) = S$79,600.
Under these assumptions, the couple's TDSR headroom is about S$231,500 above the loan they need, so exercising the option would not depend on the bonus being counted in full.
What changes the answer
| Change | TDSR loan limit | Versus S$1,650,000 needed |
|---|---|---|
| Base case above | About S$1,881,500 | About S$231,500 headroom |
| Bonus cannot be counted (for example, Jia changed jobs and has no 12-month record) | 55% x S$17,000 = S$9,350; less S$2,100 = S$7,250; S$7,250 / 0.0047742 = about S$1,518,600 | About S$131,400 short, to be covered by extra cash or CPF |
| Car loan is S$2,450 a month instead of S$1,800 | S$11,082.50 - S$2,450 - S$300 = S$8,332.50; about S$1,745,300 | About S$95,300 headroom |
| Valuation comes in at S$2,150,000 | LTV cap becomes 75% x S$2,150,000 = S$1,612,500 | Loan S$37,500 lower, plus S$50,000 cash over valuation, payable in cash |
The second row is the case where paying the option fee before checking would have mattered most: the couple would need about S$131,000 more in cash or CPF within the option period, or lose the S$22,000 option money.
What to check for your own situation
- Ask a bank for an approval in principle before paying any option money, and confirm how it has counted your bonus or commission and every debt (car loan, credit cards, other loans, guarantees).
- Ask how the bank assesses your tenure, using your income-weighted average age, since a tenure over 30 years or past 65 cuts the loan-to-value limit to 55%.
- Ask for an indicative valuation of the unit, so you know whether there will be cash over valuation.
- Read the Option to Purchase: the option money, the option period, the deposit percentage and the completion date.
- Check your cash and CPF: at least 5% in cash, the rest of the 25%, BSD of S$79,600 on S$2.2 million (due within 14 days), and legal fees.
- Use our loan affordability calculator, and read IPA vs letter of offer and the condo downpayment guide.
Frequently asked questions
Is the option fee refundable if my bank loan falls short?
Under CEA's template Option to Purchase for private homes, if the buyer does not exercise the option as stipulated, the option becomes void and the option money is forfeited to the seller. That is why it helps to get a bank's approval in principle before paying the option fee.
How do banks count bonuses for TDSR?
MAS requires banks to apply a haircut of at least 30% to variable income such as bonuses and commissions, using the average over the preceding 12 months. So S$4,500 a month of average bonus counts as at most S$3,150.
Do car loans and credit cards count towards TDSR?
Yes. All outstanding debts count, including car loans, student loans, renovation loans and credit card loans; for unsecured revolving credit, banks use the minimum payment due.
In this simulation, how much could the couple borrow?
Under these assumptions, about S$1.88 million on TDSR alone, so the 75% loan-to-value cap of S$1.65 million is the binding limit. If the bonus could not be counted at all, the TDSR limit would drop to about S$1.52 million, roughly S$131,000 short.