What do you need to pay for?
Buying a home is probably the biggest financial commitment for most Singaporeans. It is a long-term commitment which should be carefully planned upfront.
Before you start looking for a home to buy, first work out what you can afford as well as find out what you need to pay for. What you can afford depends on your current income, existing debt obligations and expenses, available savings as well as the loan amount you are eligible for.
Buying a home involves making some upfront payments, as well as monthly payments such as your housing loan instalments and conservancy charges.
Upfront payments:
- Option fee
- Initial deposit / down-payment - how much you pay and the amounts payable in cash and from CPF savings depend on the value and type of property you buy, whether you have an existing housing loan (please see table below), as well as the tenure of the loan you intend to take
- Stamp duty on purchase (Please refer to the IRAS website for information on stamp duty)
- Legal cost, including stamp fees
- Agent or salesperson’s commission and fees (Refer to CEA's consumer guides to find out more)
- Other miscellaneous cost
| Housing loan | Down-payment | Source of funding |
| HDB flat with loan from HDB | 10% of purchase price or market valuation, whichever is lower | CPF savings and cash (if CPF savings are insufficient) |
| (A) Buyers taking out a loan from a bank and with no other outstanding housing loan(s), whether on HDB flat or private property. |
HDB flat
• Loan tenure does not exceed 25 years; and
• Sum of loan tenure and age of borrower at the time of applying for the loan does not extend beyond retirement age of 65 years.
Private Property
• Loan tenure does not exceed 30 years; and
• Sum of loan tenure and age of borrower at the time of applying for the loan does not extend beyond retirement age of 65 years.
| 20% of purchase price or market valuation, whichever is lower | First 5% strictly cash only
Next 15% cash and / or CPF |
HDB flat
• Loan tenure exceeds 25 years (up to a maximum of 30 years); or
• Sum of loan tenure and age of borrower at the time of applying for the loan extends beyond retirement age of 65 years.
Private property
• Loan tenure exceeds 30 years (up to a maximum of 35 years); or
• Sum of loan tenure and age of borrower at the time of applying for the loan extends beyond retirement age of 65 years.
| 40% of purchase price or market valuation, whichever is lower | First 10% strictly cash only
Next 30% cash and / or CPF |
| (B) Buyers taking out a loan from a bank and with 1 other outstanding housing loan, whether on HDB flat or private property. |
HDB flat
• Loan tenure does not exceed 25 years; and
• Sum of loan tenure and age of borrower at the time of applying for the loan does not extend beyond retirement age of 65 years.
Private property
• Loan tenure does not exceed 30 years; and
• Sum of loan tenure and age of borrower at the time of applying for the loan does not extend beyond retirement age of 65 years.
| 50% of purchase price or market valuation, whichever is lower | First 25% strictly cash only.
Next 25% cash and / or CPF |
HDB flat
• Loan tenure exceeds 25 years (up to a maximum of 30 years); or
• Sum of loan tenure and age of borrower at the time of applying for the loan extends beyond retirement age of 65 years.
Private property
• Loan tenure exceeds 30 years (up to a maximum of 35 years); or
• Sum of loan tenure and age of borrower at the time of applying for the loan extend beyond retirement age of 65 years.
| 70% of purchase price or market valuation, whichever is lower | First 25% strictly cash only
Next 45% cash and / or CPF |
| (C) Buyers taking out a loan from a bank and with 2 or more other outstanding housing loans, whether on HDB flat or private property. |
HDB flat
• Loan tenure does not exceed 25 years; and
• Sum of loan tenure and age of borrower at the time of applying for the loan does not extend beyond retirement age of 65 years.
Private property
• Loan tenure does not exceed 30 years; and
• Sum of loan tenure and age of borrower at the time of applying for the loan does not extend beyond retirement age of 65 years.
| 60% of purchase price or market valuation, whichever is lower | First 25% strictly cash only.
Next 35% cash and / or CPF |
HDB flat
• Loan tenure exceeds 25 years (up to a maximum of 30 years); or
• Sum of loan tenure and age of borrower at the time of applying for the loan extends beyond retirement age of 65 years.
Private property
• Loan tenure exceeds 30 years (up to a maximum of 35 years); or
• Sum of loan tenure and age of borrower at the time of applying for the loan extends beyond retirement age of 65 years.
| 80% of purchase price or market valuation, whichever is lower | First 25% strictly cash only
Next 55% cash and / or CPF |
*Borrowers who currently own only one residential property(but with the intention of selling it) and are obtaining a second housing loan for the purchase of another property which is an Executive Condominium (EC) purchased directly from a property developer or a HDB flat can be treated as individuals with no outstanding housing loans. In order to avail themselves of such concessionary treatment, they will have to provide the bank granting the loan for the purchase of the second property a copy of the signed undertaking to HDB committing to complete the sale of his sole existing property within the period stipulated in the undertaking.
** For all other borrowers with existing residential properties for which they are servicing housing loans, should they wish to be treated as individuals with no outstanding housing loans (i.e. move from Categories (C) and (B) to (A)), they must provide evidence that they have sold their existing properties, and will be discharging any outstanding housing loans in respect of those properties. Similar evidence must be shown for borrowers who wish move from Category (C) to (B)). Where the existing property is a private property, the borrower can provide as evidence, a signed Sale and Purchase (S&P) agreement with the IRAS certificate showing that stamp duty has been paid on it. Where the existing property is an HDB flat, the borrower can provide HDB’s approval letter to sell the flat, which is issued within 2 weeks of the First Appointment.
***Under Categories (A), (B) and (C), where a borrower applying for a housing loan for the purchase of a HDB flat is able to produce a letter from the HDB, inviting him to select a HDB flat from a sales exercise launched before July 2013, the loan tenure rules for private property purchases can apply to him.
Please refer to the
HDB website for up-to-date information on buying HDB flats, including changes to the procedure for the purchase of resale HDB flats. Prospective buyers are encouraged to obtain in-principle loan approvals before they make a purchase decision for a flat.
Monthly payments:
- Housing loan repayments
- Fire insurance
- Mortgage reducing term insurance
- Conservancy charges / management fee
- Property taxes (Please refer to the IRAS website for information on property taxes. Individuals can choose to pay income tax and/or property tax by Giro.)
- Utilities bill
What can you afford?
Make sure you buy a home that you can afford in the long run.
To work out what you can afford, list the available resources you have to fund the upfront costs, as well as to pay ongoing mortgage payments and other expenses related to owning a home.
Ongoing expenses like property taxes, fire and mortgage insurance, conservancy and management service fees, cannot be paid for using CPF savings. Hence, you need to set aside sufficient cash for these monthly payments, in addition to meeting your current monthly living expenses and existing financial commitments. If you are taking out a floating rate loan, it is also sensible to have some buffer for possible interest rate rises in the future which could result in higher costs for you.
Also note that your lender may ask you to pay off some of the outstanding loan should the value of your property fall and the original loan to value ratio is exceeded. You may have to be prepared to dip into your savings for this purpose.
Avoid using all your CPF savings to finance your home. As you age, there will be reduced contributions to your CPF Ordinary Account. It is advisable to finish paying off your housing loan before you retire.
Your available resources could be:
- Cash savings (to meet upfront payments to buy your home and also to keep up with monthly payments in the event of income loss)
- CPF Ordinary Account savings.
- Sales proceeds (net of outstanding loan) from your current home, if any.
- Your income – do you have a steady income or is it commission-based and dependent on other factors?
The Total Debt Servicing Ratio (TDSR) is the percentage of your total monthly debt obligations (including the monthly repayment for the property loan that you are applying for) to gross monthly income. Monthly repayment instalments for all property loans (i.e. for the purchase of or otherwise secured by residential or non-residential property, located in or outside Singapore) and other debt obligations should not exceed a TDSR of 60%. Do note, for loans taken from banks and HDB to purchase HDB flats, the monthly repayment instalment for all property loans cannot exceed 30% of a borrower’s gross monthly income. Even if you are eligible for a bigger loan, do not take it up unless you are sure you will have the resources to fund it.
Using CPF savings
You may use your CPF savings to pay for part of the property and to service the loan. But there is a cap to the amount of CPF savings you can use if you are using bank financing. This cap is known as the CPF Withdrawal Limit and is currently 120% of the Valuation Limit of each property.
| Type of property | Type of loan | CPF-OA eligible for loan repayment, for up to |
| New flat from HDB | HDB concessionary loan | Full OA |
| Bank loan | 100% valuation limit or up to withdrawal limit if half of the prevailing Minimum Sum met |
| Resale flat from HDB | HDB concessionary loan | 100% valuation limit or up to full OA if half of the prevailing Minimum Sum met |
| Bank loan | 100% valuation limit or up to withdrawal limit if half of the prevailing Minimum Sum met |
| Private property | Bank loan | 100% valuation limit or up to withdrawal limit if half of the prevailing Minimum Sum met |
The Valuation Limit is the lower of the purchase price or valuation at the time of purchase. As an example: if the purchase price of an apartment is $300,000 and its valuation is $330,000, the Valuation Limit will be $300,000 and the Withdrawal Limit is $360,000.
If your total CPF usage for the home loan reaches the Valuation Limit and you are below the age of 55 years, you may continue to use your CPF Ordinary Account savings to repay the housing loan if you can set aside half of the prevailing Minimum Sum. Savings in the Special Account (including the amount used for investments) and Ordinary Account can count towards half of the prevailing Minimum Sum.
However, if you are 55 years and above when the Valuation Limit is reached, you may use the excess CPF Ordinary Account savings to repay the housing loan after setting aside your Minimum Sum cash component shortfall. Do refer to the
HDB Website to understand how CPF rules will affect your ability to make the mortgage repayments when you turn 55.
If you have already used CPF for a property and wish to use CPF for your second property, you can only use the excess CPF Ordinary Account savings for your second property after setting aside half of the prevailing Minimum Sum in your Special and Ordinary Accounts. The total CPF allowable for your second property is also capped at 100% of the Valuation Limit.
CPF Board has calculators to help you estimate when you will reach your housing limits. Do refer to the
CPF Board website to work out your CPF Withdrawal Limit.
Once you have reached the Withdrawal Limit, you will not be allowed to use further CPF savings and have to pay the remaining home loan in cash. Check your repayment schedule to find out how much cash you need to use and the period of time over which you will need to pay cash.
CPF savings can only be used for properties built on freehold or leasehold land with a remaining lease of at least 30 years provided the remaining lease can last you up to at least 80 years old.
For more information, please refer to the
CPF Board website.
| Tip: The CPF website has many calculators you can use to check affordability, CPF housing withdrawal limits, loan repayments and total interest payable. |
What is a home loan?
A home loan or mortgage loan is a loan to buy property and secured on the property that you buy. A home loan is usually repayable in monthly instalments. Before taking up a home loan, make sure that you can afford the repayments. Do ask for a repayment schedule to help you estimate costs. Starting from March 2012, your bank should also provide you with a residential property loan fact sheet to help you understand the terms of the loan.
Properties eligible for home loans include HDB flats (direct purchase and resale), private properties which are already built and private properties under construction.
Banks charge interest from the date the home loan is first disbursed, usually when you pay the remaining purchase price (after paying for the option and down-payment) to the seller. The disbursement may be in stages if the purchase price is to be paid progressively. The repayment schedule sets out your monthly payments and the dates on which you must pay it.
How much can you borrow?
Two main criteria banks use to assess your loan eligibility are:
Total Debt Servicing Ratio (TDSR) This is a computation of your total monthly debt obligations (e.g. existing home loan, new home loan that you are applying for, car loan, overdraft facilities, other credit facilities and recurrent debt obligations) to your total monthly income. Monthly repayment instalments for all property loans and other debt obligations are not to exceed a TDSR of 60%. This is to encourage prudent borrowing by households.
Specifically, for loans taken from banks and HDB to purchase HDB flats, the monthly mortgage repayment instalment cannot exceed 30% of a borrower’s gross monthly income.
Loan-to-value (LTV) ratio
This is the amount of loan taken out on a property in relation to its value expressed as a percentage. The maximum LTV at which banks in Singapore may finance your property is as set out in the following table for the relevant scenarios:2
If you are purchasing a HDB flat, have no outstanding housing loan and if:
• the tenure does not exceed 25 years; and
• the sum of the loan tenure and the age of the borrower at the time of applying for the loan does not extend beyond retirement age of 65 years.
If you are purchasing a private property, have no outstanding housing loan and if:
• the tenure does not exceed 30 years; and
• the sum of the loan tenure and the age of the borrower at the time of applying for the loan does not extend beyond retirement age of 65 years.
| 80% LTV |
If you are purchasing a HDB flat, have no outstanding housing loan and if:
• the tenure exceeds 25 years (up to a maximum of 30 years); or
• the sum of the loan tenure and the age of the borrower at the time of applying for the loan extends beyond retirement age of 65 years.
If you are purchasing a private property, have no outstanding housing loan and if:
• the tenure exceeds 30 years (up to a maximum of 35 years); or
• the sum of the loan tenure and the age of the borrower at the time of applying for the loan extends beyond retirement age of 65 years.
| 60% LTV |
If you are purchasing a HDB flat, have 1 existing outstanding housing loan and if:
• the tenure does not exceed 25 years; and
• the sum of the loan tenure and the age of the borrower at the time of applying for the loan does not extend beyond retirement age of 65 years.
If you are purchasing a private property, have 1 existing outstanding housing loan and if:
• the tenure does not exceed 30 years; and
• the sum of the loan tenure and the age of the borrower at the time of applying for the loan does not extend beyond retirement age of 65 years.
| 50% LTV |
If you are purchasing a HDB flat, have 1 existing outstanding housing loan and if:
• the tenure exceeds 25 years (up to a maximum of 30 years); or
• the sum of the loan tenure and the age of the borrower at the time of applying for the loan extends beyond retirement age of 65 years.
If you are purchasing a private property, have 1 existing outstanding housing loan and if:
• the tenure exceeds 30 years (up to a maximum of 35 years); or
• the sum of the loan tenure and the age of the borrower at the time of applying for the loan extends beyond retirement age of 65 years.
| 30% LTV |
If you are purchasing a HDB flat, have 2 or more existing outstanding housing loans and if:
• the tenure does not exceed 25 years; and
• the sum of the loan tenure and the age of the borrower at the time of applying for the loan does not extend beyond retirement age of 65 years.
If you are purchasing a private property, have 2 or more existing outstanding housing loans and if:
• the tenure does not exceed 30 years; and
• the sum of the loan tenure and the age of the borrower at the time of applying for the loan does not extend beyond retirement age of 65 years.
| 40% LTV |
If you are purchasing a HDB flat, have 2 or more existing outstanding housing loans and if:
• the tenure exceeds 25 years (up to a maximum of 30 years); or
• the sum of the loan tenure and the age of the borrower at the time of applying for the loan extends beyond retirement age of 65 years.
If you are purchasing a private property, have 2 or more existing outstanding housing loans and if:
• the tenure exceeds 30 years (up to a maximum of 35 years); or
• the sum of the loan tenure and the age of the borrower at the time of applying for the loan extends beyond retirement age of 65 years.
| 20% LTV |
2 Where a borrower applying for a housing loan for the purchase of a HDB flat is able to produce a letter from the HDB, inviting him to select a HDB flat from a sales exercise launched before July 2013, the loan tenure rules for private property purchases can apply to him.
The LTV limit takes into account credit facilities, if any, granted by other financial institutions and the property seller. Any discount, rebate or other benefit offered by any person to the borrower must be deducted from the purchase price before calculating the amount of the loan.
Factors that banks in Singapore use to determine the LTV to be granted:
• Existing loan(s)
• Tenure
• Monthly repayment instalment as a proportion of gross monthly income
You may be able to get a bridging loan if you have a residential property which you have agreed to sell, but will only receive the sales proceeds later.
Housing Loans from HDB
If you are taking out a housing loan from HDB you may borrow up to 90% of the purchase price or the property’s valuation depending on which is lower, subject to HDB’s credit assessment. The amount of housing loan that HDB can grant will depend on factors such as the buyers’ age, monthly income and financial standing. If you wish to get an HDB loan, you will need to first obtain an HDB Loan Eligibility (HLE) letter before you commit to any purchase. You may apply for an HLE letter online via the
HDB website.
For more information on buying and financing HDB flats, please refer to the
HDB website.
| Tip: The HDB website has many e-Services which you can use to check your eligibility for an HDB loan and estimate your ability to pay for your flat purchase. |
What is your monthly payment?
A home loan is usually repaid in monthly instalments. Each monthly instalment consists of a principal repayment and interest payment. The size of your monthly instalment depends on how much you have borrowed, the term of your loan, the interest rate on your home loan package and how interest is computed.
Do note that for the same amount of money borrowed, a longer tenure would result in smaller monthly payments but a higher amount of total interest paid than a shorter tenure loan.
Do note the cap on the amount you can use from your CPF savings for your home loan.
Do ask your lender for a repayment schedule.
What types of home loans are available?
There are two main types:
- Fixed-rate home loan packages where fixed rates usually apply for an initial period, thereafter followed by a floating rate); and
- Floating or variable rate home loan packages, which are usually tied to a reference interest rate.
Do make sure you are advised as to how the reference rate is derived, how often this interest rate may be re-set and under what circumstances this interest rate may be changed for the purpose of the loan.
There are also more complex home loan packages. Do make sure you understand how the special features apply and whether these may be removed or amended later.
Often, a promotional rate is offered for the first few years. This is lower than the rate for the remainder of the loan. Make sure you know how much your monthly payments will increase by when the promotional period is over.
How is interest computed?
The two common methods of interest computations are monthly reducing (monthly rest) and annual reducing (annual rest).
The total interest payable on a monthly-reducing loan is lower than the total interest payable on an annual-reducing loan.
What documents will you receive?
The bank will provide the following documents:
- Residential property loan fact sheet (from March 2012 onwards)
- Letter of offer
- Terms and conditions governing the home loan
- Other documents such as schedule of fees and charges
The mortgage document is usually provided by the bank’s lawyers.
Review and make sure you understand all documents before signing them. Ask for help if you are not sure how certain terms and conditions will apply. The bank staff or your lawyer can highlight critical clauses that you should take special note of.
What is a mortgage?
A mortgage is a form of security or collateral which protects your bank against the risk that you do not keep up with and default on your home loan payments. The bank has a first charge and the CPF Board a second charge on your property if CPF savings have been used to service the loan or as down-payment or both. If you fail to make the home loan payments when they are due, the first charge allows the bank to sell your home and use the sales proceeds to pay off what you owe the bank. The CPF Board is entitled to the remaining sales proceeds to recover what has been deducted from your CPF account.
What happens if you cannot pay? Do approach the bank quickly if you are finding it difficult to keep up with monthly payments. They may be able to help you restructure the loan.
For general information on managing your debt and the consequences of not keeping up with loan commitments,
click here.
What is refinancing? What is repricing?
Refinancing is about switching to a new home loan with lower interest rates either with your existing bank or another lender. Refinancing at your existing bank is called re-pricing or conversion. Review your home loan once every few years to see if you can save money by refinancing. Ask your existing bank for re-pricing options, but check with them first whether the lock-in period still applies to your loan. If so, certain penalties may apply.
Find out the CPF Housing Withdrawal Limit applicable to you when you refinance your loan. For more information, please visit the
CPF Board website.
What is Home Protection Scheme?
The Home Protection Scheme (HPS) is a mortgage reducing insurance which insures CPF members and their families against losing their homes should members become physically / mentally incapacitated or pass away before their housing loans are paid up. For more information on HPS, please visit the
CPF Board website.
The above information is prepared in collaboration with the Central Provident Fund Board, Housing & Development Board, Inland Revenue Authority of Singapore and Association of Banks in Singapore.
Source: MoneySENSE
