Variable income — bonuses, commission, and self-employment income — counts toward TDSR in Singapore but is subject to a 30% haircut. Only 70% of declared variable income contributes to the gross monthly income figure used to compute the 55% TDSR cap. Banks typically require two years of consistent declared variable income before including it.
Variable income haircut rules
The 30% haircut on variable income for TDSR was introduced by MAS in June 2013 and remains in force as of 2026. Source: MAS Notice 804.
Categories of income subject to the 30% haircut: annual performance bonuses, commission-based pay, profit-share, rental income from other properties, dividend income, and self-employment income.
Fixed monthly salary, allowances paid every month (e.g. fixed transport allowance), and CPF contributions on Ordinary Wages are NOT subject to the haircut.
Worked example: salesperson with high commission
| Item | Amount |
|---|---|
| Base salary (monthly) | S$5,000 |
| Annual commission (declared) | S$36,000 |
| Commission monthly equivalent | S$3,000 |
| Commission after 30% haircut | S$2,100 |
| Effective gross income for TDSR | S$7,100 |
| TDSR headroom (55%) | S$3,905 |
| Max loan @ 4% / 25 yr | S$739,000 |
Without the haircut, this borrower's effective gross income would be S$8,000 and the max loan S$833,000. The 30% haircut on the commission portion costs approximately S$94,000 of borrowing capacity.
Documentation banks require
- Bonus / commission: 2 years of NOA (Notice of Assessment from IRAS) and pay slips showing the variable component.
- Self-employment: 2 years of NOA plus business registration. Banks compute average monthly income from declared earnings.
- Rental income from other properties: Tenancy agreement plus 6 months of rental receipts. Haircut: 30%, then subject to a further cap that prevents counting rental income from the property being financed.
Two strategies to maximise variable-income credit
- Time the application after a strong year: Banks weigh the most recent NOA more heavily. Applying after a high-bonus year improves the average.
- Restructure compensation if possible: A higher fixed base with smaller bonus may yield better TDSR than the inverse, even at identical total comp. More mortgage-eligibility levers.
Frequently asked questions
Does the 30% haircut apply to overseas income?
Yes, plus a further foreign-currency haircut at the bank's discretion. Foreign-currency income is typically discounted at 30% plus another 5–10% for currency risk.
How is rental income from a second property treated?
70% of the declared rental counts toward gross income for TDSR. The full mortgage instalment on that property counts toward debt obligations — so net-of-mortgage rental headroom is often slim.
Is the 30% haircut the same across all banks?
The 30% haircut is the MAS regulatory floor. Some banks may apply a more conservative haircut (up to 50%) for certain income categories.