1. What is Home Loan Eligibility?

The home loan eligibility calculator determines how much you can borrow from Singapore banks based on your affordable monthly payments, interest rate, and loan tenure. It uses standard bank formulas to estimate your maximum loan amount.

2. How Does the Calculator Work?

The calculator uses the home loan eligibility formula:

Where:

• \( P \) — Maximum loan amount (SGD)
• \( PMT \) — Affordable monthly payment (SGD)
• \( r \) — Monthly interest rate (annual rate ÷ 12 ÷ 100)
• \( n \) — Total number of monthly payments (years × 12)

Explanation: The formula calculates the present value of an annuity (the loan amount) based on regular payments, interest rate, and time period.

3. Importance of Loan Eligibility Calculation

Details: Knowing your maximum loan amount helps in property budgeting, financial planning, and mortgage applications with Singapore banks like DBS, OCBC, or UOB.

4. Using the Calculator

Tips: Enter your comfortable monthly payment, current bank interest rate (default is DBS's 2.75% p.a.), and desired loan tenure (typically 25-30 years for Singapore properties).

5. Frequently Asked Questions (FAQ)

Q1: What interest rate should I use?
A: Use current bank rates (e.g., DBS 2.75% p.a.) or check with your preferred bank for their latest home loan packages.

Q2: How does loan tenure affect eligibility?
A: Longer tenures increase eligibility but result in higher total interest paid. Singapore banks typically offer up to 30-35 years tenure.

Q3: What other factors affect actual loan approval?
A: Banks also consider your income, credit score, TDSR (Total Debt Servicing Ratio), and property value.

Q4: Is this calculation accurate for HDB loans?
A: HDB concessionary loans use different criteria, but this gives a good estimate for bank loans.

Q5: Should I borrow the maximum amount?
A: Consider your financial comfort level and potential interest rate increases before borrowing the maximum.