Buying
The bank approved $2.1M. Here are the three numbers it didn't show you.
An In-Principle Approval tells you what a bank WILL lend, not what a purchase actually costs to live with. Here are the three numbers it skips: cash-over-valuation, real upfront cost, and your monthly commitment at a stressed rate.
By Eugene Tan · CEA R074026J · 5 June 2026 · 6 min read
Getting an In-Principle Approval (IPA) for $2.1M feels like the finish line. It isn’t. It’s a lending decision — a bank telling you what it’s willing to lend based on your income and credit, not what the purchase will actually cost you or whether the monthly number fits your life.
What an IPA actually is
An IPA is a conditional, preliminary assessment — income, credit history, existing debt — not a guarantee of final approval. Final approval still needs full document verification, a property valuation, and underwriting. Validity is commonly around 30 days, but this varies by bank and can run longer, so check your specific offer letter rather than assuming a standard window.
Here are the three numbers the approval letter doesn’t put in front of you.
1. The lending framework behind the number
Before anything else, know the ceilings your bank is working within:
55%
TDSR ceiling
30%
MSR ceiling (HDB/EC only)
75%
Max LTV, first home loan
MAS Total Debt Servicing Ratio & Mortgage Servicing Ratio framework
TDSR caps all your debt obligations combined at 55% of gross monthly income. MSR only applies if you’re buying an HDB flat or an EC from a developer — private property buyers don’t face it. Where both apply, the bank uses whichever cap is more restrictive. LTV of 75% is for a first home loan with no other outstanding housing loans; it steps down if you already have one. These are MAS-set parameters, not bank preference, and they can change — worth a quick check with your bank before you commit.
2. Cash-over-valuation — the gap that’s cash-only
The mechanic
Banks lend against the valuation or the purchase price — whichever is LOWER. If you agree to pay more than the property’s valuation, that gap is cash-over-valuation (COV), and it has to be paid entirely in cash. No loan covers it. No CPF covers it.
So an approved loan amount tells you nothing about whether you’re overpaying relative to valuation. That’s a separate check, every time, before you sign.
3. The real upfront cost — not just the downpayment
Most buyers mentally budget the downpayment and stop there. The downpayment is the biggest line item, but it isn’t the only one due before or at completion.
Here’s an illustrative example only — not a real transaction — on a hypothetical S$1.5M private condo purchase:
| Item | Amount |
|---|---|
| Purchase price | $1,500,000 |
| Loan (75% LTV) | $1,125,000 |
| Downpayment (25%) | $375,000 |
| — of which minimum cash (5%) | $75,000 |
| — remainder, cash and/or CPF (20%) | $300,000 |
| Buyer’s Stamp Duty (BSD, tiered) | $44,600 |
| Legal/conveyancing (all-in estimate) | $3,500–$7,500 |
| Valuation fee (approximate) | $300–$500 |
| Total realistic upfront | ~$423,000–$427,000+ |
Of the 25% downpayment, only 5% must be cash — the other 20% can be cash and/or CPF-OA. But BSD, legal fees, and the valuation fee sit on top of that, and none of them are CPF-flexible in the same way. Add it up and the real number is roughly $48,000–$52,000 more than the downpayment alone — money that needs to be liquid and ready, not “somewhere in CPF.”
One more line worth naming: since this is a first property, Additional Buyer’s Stamp Duty (ABSD) is 0% for a Singapore Citizen here — it only bites from a second property onward. Not the focus of this post, but it’s part of why the total above isn’t higher.
Renovation isn’t in this table at all. It’s real money, but it’s discretionary in timing and scope — budget it separately.
4. The monthly number at the STRESSED rate
The bank doesn’t test your $2.1M loan at today’s rate. It tests it at a stress rate — a medium-term interest rate floor commonly cited around 4.0% p.a. for private property. This is a MAS-set parameter, not a bank preference, and it’s worth confirming directly with your bank since MAS can and does adjust it.
On the $1,125,000 loan in the example above, stress-tested at that ~4.0% p.a. over a 25-year tenure, the monthly instalment works out to roughly $5,940/month.
That’s not necessarily what you’d pay today — your bank’s actual offered rate could well be lower. It’s the number the bank uses to check you can still service the loan if rates climb. Useful to know your real monthly commitment could sit meaningfully above what today’s promotional rate suggests.
The point
An IPA answers “will the bank lend it.” It doesn’t answer “what does this cost me to hold.” Cash-over-valuation, the real upfront number, and the stressed-rate monthly figure are the three that do. Run them before you commit, not after.
If you want a second pair of eyes on your own numbers before you sign anything, that’s a conversation worth having early, not after the OTP is signed.
Sources
- SingSaver — How to get a mortgage pre-approval
- Cashew — What is an In-Principle Approval (IPA) and why do I need one
- PropertyGuru — Approval-in-Principle vs pre-qualification vs approval
- ResExamPrep — TDSR & MSR in Singapore
- OhMyHome — Mortgage 101: MSR and TDSR
- 99.co — Property jargon: Cash Over Valuation (COV)
- SmartCalculator.sg — BSD (Buyer’s Stamp Duty) Singapore 2026
- HomeJourney — ABSD rates by nationality 2026
- LovelyHomes.sg — Conveyancing fees in Singapore 2026
- MoneySmart — Loan-to-Value ratio guide
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