Property · free tool
Stress test: can I still pay if rates rise or an income stops?
A home is comfortable when the instalment stays within about 25% of gross income, you hold at least 6 months of instalments and expenses in cash, and the loan ends by 65. This test checks all three and shows what happens if rates rise by up to 3 points or one income stops.
How it works
- Rate shock: the instalment is recalculated at your rate plus 1, 2 and 3 percentage points. Floating bank rates have moved this much within a few years.
- Buffer: cash savings ÷ (instalment + monthly expenses) = months you could keep going with no income.
- One income stops: for a couple, each income is removed in turn to see whether the other covers the instalment and expenses, and if not, how long savings last.
- Age: a loan that runs past 65 eats into retirement savings and CPF.
Worked example
A S$500,000 loan over 25 years at 3% costs S$2,371 a month. If rates rise to 6%, it becomes S$3,222, about S$850 more each month. A couple earning S$9,000 sees the share of income move from 26% to 36%.
Common questions
Why 25% of income if the rules allow 30% or 55%?
The legal limits are ceilings, not targets. Keeping the instalment near a quarter of gross income leaves room for CPF contributions, children, parents, savings and rate rises.
How much buffer should I keep?
At least 6 months of instalments plus household expenses in cash, more if your income is variable or you are the only earner.
What if I fail the stress test?
Consider a lower price, a larger downpayment, a longer tenure that still ends by 65, or waiting a year to save more.
What next
Figures as of . Rules change; confirm with your bank, HDB, CPF Board and IRAS before you commit.
Official sources: MAS · HDB · IRAS · CPF
This calculator is for information only and is not financial, property or legal advice. Jaimes Tan is not a licensed financial adviser or property agent.