What Is an In-Principle Approval (IPA) for a Home Loan in Singapore?
An In-Principle Approval (IPA) is a lender’s formal indication of the maximum home loan amount you qualify for based on your financial documents. In Singapore, the IPA is the most reliable way to confirm your borrowing capacity before committing to any property purchase. It reflects bank-level assessment under the Total Debt Servicing Ratio (TDSR), Mortgage Servicing Ratio (MSR) (for HDB/EC), and Loan-to-Value (LTV) framework.
An IPA is the only credible benchmark of affordability before signing an Option to Purchase (OTP). With tight OTP timelines and strong competition in the market, buyers who secure an IPA are able to act decisively and avoid costly financing surprises.
The IPA confirms your loan eligibility under MAS regulations. It ensures your intended purchase fits within:
- TDSR (55%) – total monthly debt obligations must not exceed 55% of gross income.
- MSR (30%) – for HDB and Executive Condominium purchases, mortgage repayments cannot exceed 30% of gross income.
- LTV Limits – the maximum portion of the property price that can be financed. For first housing loans, the cap is up to 75% when tenure and age conditions are met. If you want a deeper breakdown of how financing limits work, you may refer to our Loan-to-Value (LTV) guide, which explains how banks determine the final financing amount.
An IPA prevents situations where a buyer pays an OTP fee without knowing whether their full financing will be approved later.
What the IPA Covers
A typical IPA outlines:
– The maximum loan amount the bank is prepared to lend
– Indicative loan tenure, based on your age and income
– Banks may provide a factsheet of interest rate packages (fixed or floating; banks commonly reference SORA for floating rates).
– Estimated monthly instalment
– Broad terms and conditions, subject to full documentation
The IPA is non-binding, meaning it is still subject to valuation results and final underwriting. If your income, debts, or employment situation changes before the formal application, the final approved amount may differ.
How Banks Assess an IPA
Banks evaluate an IPA with the same financial scrutiny used for a full home loan — the only difference is that the OTP is not required.
1. Income Stability
Banks assess whether your income is consistent and reliable. They review:
Latest 3 months’ payslips (for salaried employees)
12 months of CPF contribution history
Latest IRAS Notice of Assessment
For self-employed individuals or business owners, banks additionally check:
IRAS Notices of Assessment for the past 1–2 years
Bank statements (case by case)
Banks also apply a 30% income haircut on self-employed income.
This means only 70% of declared self-employed income is counted in the IPA calculation to buffer against income fluctuations.
2. Credit Record
Banks check:
Your Credit Bureau Singapore (CBS) score
Repayment behaviour across credit cards, personal loans, car loans, education loans, and other credit facilities
3. Existing Liabilities
All existing debt obligations are included in the TDSR computation, such as:
Credit card instalments
Personal or car loan instalments
Any other monthly commitments
Banks also apply their internal stress-tested interest rate to estimate mortgage affordability.
4. Age and Tenure
The tenure is adjusted so your repayment age remains within the bank’s maximum limit, typically 65–75 years.
Why Getting an IPA Matters
1. Clear and Verified Affordability
An IPA removes guesswork from your property search by showing how much you can realistically borrow. It helps you shortlist homes within your means and ensures that your expectations are grounded in actual affordability.
Before applying for an IPA, you can use our Loan Eligibility Calculator to estimate your potential loan amount and monthly repayment based on your income, age, and property type. This offers a practical first view of your borrowing range and helps you understand how banks may assess your profile.
While online calculators provide a useful starting point, a qualified mortgage advisor can offer deeper insights — aligning your financing structure with your long-term plans, CPF usage, and potential refinancing options later on. This combination of self-assessment and professional guidance ensures you enter the IPA process with clarity and confidence.
2. Faster Loan Approval After OTP
Once an IPA is in place, the bank already has your financial documents. After the OTP is signed and valuation is completed, issuing the Letter of Offer becomes significantly faster.
3.Credibility With Sellers and Property Agents
In competitive markets, an IPA demonstrates financial readiness. Sellers and agents tend to take buyers with an IPA more seriously, as it shows you have undergone financial assessment and are ready to proceed with financing.
4. Reduced Risk of Rejection
Applying for an IPA first helps you identify potential issues — such as high TDSR or weak credit — before locking in a property. This prevents last-minute rejection and the risk of losing your option fee.
IPA Validity Period
Banks issue IPAs with a validity of 30 to 90 days.
The IPA remains valid as long as your financial situation does not change. If income, employment, liabilities, or credit score changes, the bank will reassess.
Expired IPAs can be renewed by submitting updated income documents. Some banks offer a one-time extension before expiry.
IPA vs. Letter of Offer (LO)
| Feature | In-Principle Approval (IPA) | Formal Letter of Offer (LO) |
|---|---|---|
| Binding Status | Non-binding; indicative approval | Legally binding once accepted |
| Property Valuation | Not yet required | Mandatory before issuance |
| Purpose | Confirms borrowing capacity | Final approval and disbursement |
| Validity | 30–90 days | Until stated expiry date |
| Interest Rate | Indicative | Locked upon acceptance |
| Used For | Budgeting, securing OTP | Completing property purchase |
Common Reasons for IPA Rejection or Revision
Banks may revise or reject an IPA if:
- TDSR exceeds regulatory limits
- Credit records show missed payments or adverse events
- Income stability is insufficient or documents do not match CPF/IRAS records
- Employment changed, probation status updated, or income reduced
- Additional liabilities appear in the CBS report
- Property characteristics introduce risk at the LO stage (e.g., short lease)
Documents Required for IPA Application
Prepare the following so your assessment is processed smoothly:
- NRIC (front and back)
- Latest 3 months’ payslips
- Latest IRAS Notice of Assessment
- CPF Contribution History (12 months)
- Latest 3–6 months’ bank statements
- Employment contract or letter (for recent job changes)
- Statements for existing loans
If you need a clearer breakdown of each document and how to retrieve them, check out our step-by-step guide to retrieve HDB, CPF and IRAS documents.
Summary
An In-Principle Approval (IPA) is the most practical first step before purchasing a property in Singapore. It provides financial clarity, aligns your plans with MAS lending limits, and positions you as a credible buyer when negotiating an offer.
While it is not a binding loan offer, it acts as a reliable benchmark to guide your property search and financial planning. For an early estimate of your borrowing capacity before applying, you can try our Loan Eligibility Calculator — it helps you understand how banks may assess your loan size based on income, age, and property type.
Disclaimer:
The information provided in this blog is for general informational purposes only and does not constitute financial advice. While The Loan Connection (TLC) strives to ensure accuracy, we make no guarantees as to the completeness, reliability, or timeliness of the information. Readers are encouraged to verify details independently and consult qualified professionals before making any financial decisions. TLC is not liable for any losses or damages arising from reliance on the content herein.
