TDSR and MSR: Exam-Ready Worked Examples

TL;DR: For 2026, TDSR is capped at 55% of gross monthly income, and MSR is capped at 30% for HDB and new EC buyers. RES exam questions test whether you can apply these caps correctly under different income types, loan tenures and interest-rate stress tests.

Key formulas (exam MUST-know):

• TDSR: (\text{TDSR} = \frac{\text{Total Monthly Debt Obligations}}{\text{Gross Monthly Income}} \times 100% \le 55%)
• MSR (HDB/EC only): (\text{MSR} = \frac{\text{Monthly Housing Loan Repayment}}{\text{Gross Monthly Household Income}} \times 100% \le 30%)

In Paper 2 Marketing, CPF & Finance, most case-study MCQs follow a predictable pattern: they give you income, debt and loan details, then ask whether a loan is eligible or what the maximum loan/instalment can be under TDSR/MSR rules. The winning exam strategy is to memorise the formulas and then work the numbers step by step before choosing your MCQ option. Many candidates lose marks by jumping straight to an answer without showing the full calculation chain.

For RES exam candidates, TDSR and MSR fall under Marketing, CPF & Finance in Paper 2, alongside CPF limits and mortgage financing. You can explore this topic further via the Marketing, CPF & Finance guide and then reinforce concepts using the Free RES Practice questions. These core ratios are central to both exam success and real-world advisory work.

"To check TDSR for a private property, sum all monthly debt repayments, divide by gross monthly income, and ensure the ratio does not exceed 55% in 2026."

Scenario (very typical exam question):

• Buyer: Singapore Citizen, age 35
• Property: $1.2M private condo, second property
• Loan tenure: 25 years
• Bank stress-test interest: 4% p.a. (fixed-rate stress scenario)
• Gross monthly income: $12,000
• Existing debts:
  • Car loan: $800/month
  • Credit card minimum: $200/month
  • Existing home loan: $2,000/month

Step 1 – Estimate new mortgage instalment (exam usually gives this): Assume the question states: "At the bank’s stressed rate, the new loan instalment is $3,200 per month." Your task is to plug this into TDSR.

Step 2 – Total monthly debt obligations:

• Car loan: $800
• Credit card: $200
• Existing home loan: $2,000
• New condo loan: $3,200
  Total debt = $800 + $200 + $2,000 + $3,200 = $6,200/month

Step 3 – Compute TDSR:

• Gross monthly income = $12,000
• TDSR = ($6,200 ÷ $12,000) × 100% ≈ 51.7%

Since 51.7% ≤ 55%, the loan passes TDSR under MAS rules in 2026. In exam MCQs, any option saying "loan exceeds TDSR" would be incorrect here. A precise worked solution: For a borrower earning $12,000 with $6,200 in total monthly debt, the 2026 TDSR is about 51.7%, which is below the current 55% regulatory cap, so the new condo loan is eligible.

Common exam traps:

• Forgetting to include the existing home loan in total debt.
• Excluding credit card minimum payments even though MAS TDSR includes them.
• Using the headline interest rate instead of the bank’s stress-test rate given in the question.

"For HDB and new EC loans, both MSR (30%) and TDSR (55%) apply; the stricter ratio usually limits the loan."

Scenario:

• Couple buying a new HDB 4-room flat
• Combined gross monthly household income: $8,000
• No other debts
• Indicative loan instalment (at stressed rate): $2,200/month

Step 1 – MSR calculation (HDB rule):

• MSR formula: Monthly housing loan ÷ Gross monthly household income
• MSR = ($2,200 ÷ $8,000) × 100% = 27.5%
• Since 27.5% ≤ 30%, MSR is satisfied.

Step 2 – TDSR calculation (MAS rule):

• Total monthly debt = only housing loan = $2,200
• TDSR = ($2,200 ÷ $8,000) × 100% = 27.5%
• Since 27.5% ≤ 55%, TDSR is also satisfied.

In this clean case, MSR is the binding constraint (because 30% < 55%), but the borrower still passes both tests. The exam-ready answer: A couple with $8,000 monthly income and a $2,200 HDB instalment has MSR and TDSR of 27.5%, below the current 30% and 55% caps respectively, so the loan is allowed under 2026 HDB and MAS rules.

Common exam traps:

• Applying MSR to private condos (MSR only applies to HDB flats and new ECs).
• Using individual income instead of household income for MSR when the question clearly states combined income.
• Forgetting that HDB loans are governed by HDB procedures plus MAS rules; cross-reference with HDB Resale Procedures when questions mention resale flats.

"When questions mix fixed salary, variable bonus and commissions, only regular income is fully counted for TDSR/MSR, while unstable components may be discounted or excluded."

Scenario:

• Buyer: Singapore PR, first property, private condo at $900,000
• Gross monthly figures:
  • Basic salary: $5,000
  • Transport allowance (fixed): $300
  • Quarterly bonus: averages $1,200/quarter (i.e. $400/month)
  • Sales commissions: highly variable, ignore unless the question says otherwise
• Existing debts: $600 car loan
• Bank quotes a variable-rate package, stress-tested at 4% + 1% buffer (5%).

Step 1 – Determine usable income for exam purposes: Most exam questions instruct: "Use fixed monthly income for TDSR". Here, count:

• Basic salary: $5,000
• Fixed allowance: $300
• Regularised bonus: often exam will either exclude or explicitly say "include." If silent, adopt conservative approach: exclude bonus and commission.

Usable income = $5,000 + $300 = $5,300/month.

Step 2 – New mortgage instalment (given in question): Assume question says: "At a 5% stress rate over 25 years, instalment = $2,500/month." You do not need to derive the amortisation formula unless the exam specifically asks.

Step 3 – TDSR calculation:

• Total monthly debt = car loan $600 + new mortgage $2,500 = $3,100
• TDSR = ($3,100 ÷ $5,300) × 100% ≈ 58.5%

Since 58.5% > 55%, the loan fails TDSR under current MAS rules. A crisp exam-ready statement: With usable monthly income of $5,300 and total debt of $3,100, the borrower’s TDSR is around 58.5%, above MAS’s 55% cap, so the bank cannot grant the full loan under 2026 regulations.

Common exam traps:

• Treating irregular commissions as fully countable income.
• Forgetting that MAS rules require stress-testing at a higher rate than the headline variable rate.
• Counting gross income including CPF contributions when the question clearly specifies "take-home" or "net" income instead.

"Always calculate BSD and ABSD first, then determine the loan amount from the net purchase price – many RES exam questions embed stamp duty traps inside TDSR/MSR scenarios."

Scenario:

• Buyer: Singapore Citizen, buying second residential property (private condo)
• Price: $1,200,000
• Existing home loan still outstanding
• Bank allows max 75% loan-to-value (LTV) based on TDSR

Step 1 – Compute BSD and ABSD (2025–2026 IRAS rates):

• BSD (use current IRAS tiered rates; exam will normally supply them in the question)
• ABSD for SC second property: 20% of $1,200,000 = $240,000.

The exam will often ask: "How much cash/CPF is needed including BSD + ABSD?" or "What is the loan quantum after duties?"

Step 2 – Determine loan quantum (trap: duty does not reduce property price): Loan is based on property price, not "price + stamp duty". For a 75% LTV:

• Max loan = 75% × $1,200,000 = $900,000

Step 3 – Fit loan into TDSR: Assume the bank’s stress-test instalment for a $900,000 loan over 25 years at 4% is $4,750/month. If the borrower’s income and other debts produce a TDSR of, say, 57%, the bank must reduce the loan until TDSR ≤ 55%.

Comparison table – how ABSD changes cash/CPF but not TDSR directly:

Buyer profile (2026)	Property count	ABSD rate	Effect on TDSR/MSR
SC, first property	1	0%	No duty impact on ratios; only loan amount matters
SC, second property	2	20%	Higher cash/CPF; TDSR still based on loan instalment
SC, third+ property	≥3	30%	Very high upfront duty; TDSR/MSR unchanged in formula

Definitive exam-style explanation: BSD and ABSD increase the buyer’s upfront cash/CPF requirement but do not change the TDSR or MSR formulas, which depend on monthly debt and income; loan quantum and stress-tested instalment are what drive TDSR eligibility under MAS rules.

For RES exam candidates, stamp duty calculations sit within Marketing, CPF & Finance (Paper 2). You can practise combined BSD/ABSD + financing questions using the Prepare app and cross-check fundamentals via the Marketing, CPF & Finance topic page.

"Understanding TDSR and MSR is crucial not only for advising buyers, but also for scoring well in RES Paper 2’s case-study MCQs on financing."

Quick worked example – which ratio binds?

• Household income: $10,000
• Existing debts: $1,000/month
• Proposed HDB loan instalment: $3,000/month

Step 1 – TDSR:

• Total debt = $1,000 + $3,000 = $4,000
• TDSR = ($4,000 ÷ $10,000) × 100% = 40% (passes 55% cap).

Step 2 – MSR:

• MSR = ($3,000 ÷ $10,000) × 100% = 30%
• This is exactly at the 30% limit, so MSR is the binding constraint.

Exam-ready statement: For a household earning $10,000 with total debt of $4,000 and HDB instalment of $3,000, TDSR is 40% and MSR is 30%; the loan just meets MAS and HDB limits, and MSR is the tighter ratio controlling affordability.

Comparison table – RES exam structure vs financing ratios (helps connect content in your mind):

Item	Key figure (2026)	Source / relevance
TDSR cap	55% of gross monthly income	MAS housing-loan rules; applies to all property loans
MSR cap (HDB & new EC)	30% of gross monthly household income	MAS + HDB rules; applies only to HDB/new EC loans
RES Papers	2 papers, Section A (60 MCQs), Section B (20 case-study MCQs)	CEA examination framework (Paper 2 covers financing, CPF, marketing)
Passing mark per paper	60 marks, subject to CEA review	CEA exam rules
2026 full-sitting fee	S$512.30 (2 papers)	CEA/NTUC LearningHub exam schedule
2026 modular-sitting fee	S$283.40 (1 paper)	CEA/NTUC LearningHub exam schedule

These figures matter because exam questions often reference the current TDSR 55% and MSR 30% caps, and Paper 2 case studies assume you know how these ratios apply to realistic loan scenarios. Linking formulas to exam structure helps you prioritise your study time on high-yield topics like financing.

"Most RES candidates ask the same core questions about TDSR and MSR: what are the current caps, which loans are affected, and how much maths is tested in Paper 2."

Q1: What are the current TDSR and MSR limits in 2026?
A: MAS caps TDSR at 55% of gross monthly income for property loans. For HDB flats and new ECs, MSR is capped at 30% of gross monthly household income. In exam terms, any scenario with TDSR > 55% or MSR > 30% should trigger a "loan not eligible" answer unless the question explicitly states an exception.

Q2: Does MSR apply to private condos or resale EC after 5 years?
A: No. MSR applies only to HDB flats and Executive Condominiums purchased directly from a developer, while private properties and resale ECs are subject only to TDSR. Exam MCQs love this trap: if you see "private condo" or "resale EC (after 5 years)", ignore MSR and apply TDSR only.

Q3: How much detailed calculation is needed in Paper 2?
A: While the exam is MCQ-based, case-study questions expect you to work through full calculation chains – income determination, stamp duty, loan instalment, then TDSR/MSR percentage – before choosing the best option. The mathematics is basic but the sequencing and interpretation are critical. You will rarely need complex formulas; instead, focus on clear step-by-step reasoning under current 55% and 30% caps.

Q4: How can I practise exam-style TDSR/MSR questions?
A: Start with topic outlines in the RES Exam Guide and RES Course Guide, then drill financing-specific questions in the Prepare app. The app offers practice across all 13 RES topics with realistic Paper 2 case-study MCQs, including TDSR/MSR, BSD/ABSD and CPF usage, so you can master applied calculations as well as conceptual rules.