When applying for a home loan in Singapore, most people focus on income requirements and TDSR limits. But what happens if your income alone isn’t sufficient to qualify for the loan amount you need — even though you have strong savings or substantial assets?
This is where “show funds” and “pledging of funds” come in.
These two methods allow buyers with high net worth but lower income to strengthen their loan application, meet bank requirements, and potentially qualify for a higher loan amount.
In this guide, we explain the difference between show funds and pledged funds, how each works, and what you must consider before using either option.
Why “Show Funds” and “Pledging” Matter in Singapore’s Home Loan System
Under Singapore’s lending frameworks, especially the Total Debt Servicing Ratio (TDSR), banks must ensure that your loan instalments do not exceed 55% of your gross monthly income.
However, some buyers may have:
- Strong net worth
- High levels of assets
- Large cash reserves
- Significant investment portfolios
- Income that fluctuates or appears low on paper
In these situations, even though you are financially capable, your official income documents may not reflect your true ability to repay the loan.
This is where banks may allow show funds or pledging as alternative proof of financial strength.
What Is “Show Funds”?
“Show funds” means demonstrating to the bank that you have sufficient cash or liquid assets to service the monthly instalments of the loan.
Types of assets that can be used as show funds:
- Cash savings
- Bank deposits
- Fixed deposits
- Stocks and shares
- Liquid investment assets
- CPF (for specific cases)
The bank wants to see that you have enough financial resources to support the mortgage even if your income varies or seems insufficient.
How “Show Funds” Works
You must present proof of funds twice:
1️⃣ During Loan Application
The bank checks whether you have enough assets to support the loan you are applying for.
2️⃣ During Loan Disbursement
The bank verifies again to ensure the funds are still available.
This is to confirm you remain financially stable and still meet the eligibility criteria.
Why Banks Accept Show Funds
“Show funds” reassures the bank that:
- You can service monthly instalments if your income is inconsistent
- You have fallback resources
- You pose lower lending risk
This is common for:
- Self-employed individuals
- Retirees
- Commission-based earners
- Business owners
- High-net-worth individuals with low declared income
What Is “Pledging of Funds”?
“Pledging” means placing your cash or liquid assets with the same bank providing your home loan — as collateral.
In return, the bank:
- May approve a higher loan quantum
- May offer more favourable loan terms
- May treat pledged funds as income support
Example:
If you need a higher loan than your income qualifies for, pledging funds helps bridge the gap.
How Pledging Works
When you pledge funds:
- The bank legally holds your cash or assets
- You may not be allowed to withdraw the money
- Funds are locked until conditions are met (typically for the loan duration, or a specified number of years)
Because the funds are locked, they become illiquid, meaning you cannot freely use them.
Key Differences Between Show Funds and Pledging
| Feature | Show Funds | Pledging of Funds |
| What it means | Showing proof of assets | Placing assets as collateral |
| When required | At application & disbursement | At approval & during loan tenure |
| Flexibility | You keep control of funds | Funds are locked / restricted |
| Impact on loan | Supports approval | Helps increase loan quantum |
| Liquidity | Fully liquid | Low liquidity |
Key Considerations Before Using Either Option
1. Liquidity Needs
Do you need easy access to your funds?
If yes → Show funds is better.
If no → Pledging may help you secure a higher loan.
2. Long-term Financial Planning
Pledged funds may be locked for years, limiting your:
- Cash flow
- Investment mobility
- Emergency reserves
3. Risk Appetite
Pledging can strengthen your loan profile, but reduces your flexibility.
Show funds is safer but may not increase your maximum loan amount significantly.
4. Bank Policies
Each bank has different criteria for:
- Eligible assets
- Minimum pledge amount
- Duration of pledge
- Recognition for show funds
Always check with a property financing specialist.
Conclusion: Show Funds and Pledging Help High-Asset Borrowers Qualify for Home Loans
If your income does not fully meet TDSR, but you have substantial assets, these two methods can make a huge difference in your loan application.
Use “Show Funds” if you want:
✔ Full control over your money
✔ Flexibility
✔ To demonstrate financial stability
Use “Pledging” if you need:
✔ A higher loan quantum
✔ Better loan terms
✔ Stronger support during TDSR evaluation
Both approaches help banks see that you are a low-risk, financially capable borrower.
Unsure whether you should “show funds” or pledge your assets?
I can help you analyse your financial profile and determine the best option for your loan application.
📞 Reach out to me, Libin from Instyle Homes (ISH), for a friendly, non-obligatory discussion today! 😊
