Can a self-employed or entrepreneur get a mortgage loan?

If you are self-employed or an entrepreneur, you need to declare your annual income to IRAS.
Then you will receive a notice of assessment for the year.

It is hard for the bank to assess your monthly income because the income may be unstable.

The bank may ask you to submit a few years of notice of assessment. Your income assessment will be subjected to a “haircut” of 30% off your gross income.

The maximum duration of a loan is 30 years, and up to 65 years old.

Let’s do a computation for your asset planning using this calculator.

Let’s suppose you take a loan at the age 35 for 30 years until you reach 65 years old.
Let’s suppose your monthly salary is $5K.

The scenario for an employee and you want to borrow for a private condo”
The current TDSR is based on 55% of your monthly income.
That means you can borrow up to a maximum of $612K

For a self-employed or entrepreneur, the maximum loan is $228K
This is because the bank discount 30% off your $5K income (hair cut)
That means only $3.5K is being assessed every month.

The scenario for an employee:
If you want to borrow for a HDB unit.
The maximum loan is $299K (based on MSR ruling)
HDB allows you to borrow up to 25 years.

The scenario for self-employed or entrepreneurs for a HDB unit.
You get $90K less. Your maximum loan is $209K.

The simple answer is ‘Yes’. You can get a mortgage loan.
But you have to factor in the ‘haircut’ of 30%.
Your loan will be less than most people.

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