Under Monetary Authority of Singapore (MAS) regulations, banks do not look only at your basic salary. They assess commission and variable earnings through a clear regulatory formula:
### 1. The Statutory 30% "Haircut"
Banks apply a mandatory **30% reduction** on variable and commission income to buffer against fluctuations:
* **Fixed Basic Salary (if any):** Counted at **100%**.
* **Commission / Incentives / Bonuses:** Counted at **70%**.
* *Example:* If your 12-month average commission is S$10,000/month, the bank credits your qualifying monthly income as S$7,000. If you have a S$2,000 basic, total assessed income is S$9,000 (S$2,000 + S$7,000).
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### 2. Required Timeframe & Documentation
To determine your monthly average, banks require verified historical records:
* **IRAS Notice of Assessment (NOA):** Lenders inspect your latest **1 to 2 years** of tax assessments (Form B / B1). They divide total assessable trade/employment income by 12 (or 24), then apply the 30% haircut.
* **12 Consecutive Months of Payslips & Bank Statements:** If your recent earnings have grown substantially since your last tax filing, banks cross-examine 12 months of commission vouchers alongside matching bank account deposit credits.
* **Track Record Duration:** Lenders generally require at least **6 to 12 months** of continuous commission history (24 months for 100% commission or self-employed individuals).
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### 3. Borrowing Caps Applied (TDSR & MSR)
Your haircutted income is then run through MAS regulatory ratios:
* **Total Debt Servicing Ratio (TDSR):** Total monthly debt obligations (car loan, credit lines, study loans, new mortgage) cannot exceed **55%** of your recognized (70%) income.
* **Mortgage Servicing Ratio (MSR):** For HDB flats or Executive Condominiums (ECs), the monthly mortgage alone cannot exceed **30%** of your recognized income.
**Pro-Tip:** If your variable income yields a lower loan than needed, you can bridge the quantum via MAS **Asset Pledging / Show Funds** using liquid cash, fixed deposits, or Singapore shares.
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Gan Eng Joo Onassis 颜荣裕, REALTOR®
MSc BIT (Middlesex, UK); BBA (UniSA)
CEA Reg No: R021244C | Mobile:
(+65) 88899918
Email: onassis@sgagent.com
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