Credit to Finance a Flat Purchase

Choose your housing loan

Learn about the key considerations to decide whether to take a housing loan from HDB or the FIs.

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	Housing Loan from HDB	Housing Loan from Financial Institutions (FIs)
Applicable interest rate	To encourage flat applicants to borrow prudently, HDB uses the higher of the following to compute an eligible housing loan amount: Interest rate floor (currently at 3.0% per annum); and Prevailing HDB housing loan interest rate Prevailing HDB housing loan interest rate Concessionary interest rate Pegged at 0.1%-point above the prevailing CPF Ordinary Account (OA) interest rate and reviewed quarterly. Commercial interest rate where charged, for flat applicants taking a second HDB housing loan before disposing of their existing flat The interest rate will be converted to the concessionary rate after the flat applicant has disposed of their existing flat, within 6 months from the legal completion of their flat purchase, and used the CPF refund and 50% of the cash proceeds received from the disposal of the existing flat to reduce the second HDB housing loan amount. Read more on the conditions to take a second HDB housing loan. The interest payable on the HDB housing loan is computed on a monthly-rest basis or such other basis as HDB may decide. Find out more on the interest rate.	Varies among different FIs and may change with market conditions View and compare housing loan packages offered by the participating FIs
Repayment period	Capped at whichever is the shortest: 25 years; 65 years minus the average age of the applicants; or Remaining lease of the flat minus 20 years.	Up to 30 years. A lower Loan-to-Value limit may apply if the repayment period exceeds 25 years.
Loan-to-Value (LTV) Limit	Refers to the maximum amount of housing loan a flat applicant may take up, expressed as a percentage of the lower of the purchase price or value of the flat. The LTV limit and conditions are different when you take a housing loan from HDB or an FI: Housing Loan from HDB^ Housing Loan from Financial Institutions New flats Up to 75% of the flat price Up to 75% of the flat price Resale flats Up to 75% of the lower of the resale price or value of the flat Up to 75% of the lower of the resale price or value of the flat Conditions If the remaining lease of the flat does not cover the youngest applicant to the age of 95 and above at the point of flat application, the LTV limit will be pro-rated from 75% FIs may have restrictions for purchase of flats with shorter remaining leases; and/ or if your repayment period exceeds 25 years or you have additional housing loan(s) ^ For complete resale applications received by HDB on or after 20 August 2024 and flat applications for the October 2024 sales exercise onwards. Applicants who have booked a flat with HDB or submitted a resale application will be provided with a customised financial plan, which will include the applicable LTV limit at the point of the flat application (if they are taking an HDB housing loan), and the payments required at the various milestones of their flat purchase.
Minimum cash payment	No minimum cash payment if you have sufficient savings in your CPF OA and housing loan for all the payments.	At least 5% of the lower of the flat price or value must be paid in cash. The balance can be paid in cash, CPF savings in your OA, and/ or housing loan. The minimum cash payment will depend on the applicable LTV limit based on the flat applicants’ age and loan period.
CPF utilisation	You may retain up to $20,000 in your CPF OA. Remaining CPF savings in your OA must be used for the flat purchase (up to the applicable limits).	You may use any amount in your CPF OA for flat purchase (up to the applicable limits).
	The following limits for CPF usage are applicable to both housing loan options: The total amount of CPF savings that can be used to buy or take over the flat and pay the monthly mortgage instalments will depend on the extent the remaining lease of the flat can cover the youngest applicants up to the age of 95; and Applicable CPF usage limits for the purchase of: New flats Resale flats When the allowed CPF amount is used up, you need to pay for the balance purchase price and/ or the monthly mortgage instalments in cash. Use CPF Board's housing usage calculator to estimate the amount of CPF savings you can use for your flat purchase, and their home purchase planner to understand how the use of CPF savings for a flat purchase impacts your retirement payouts. For more information on the use of CPF savings, please visit CPF Board’s website.
Mortgage Servicing Ratio (MSR) and Total Debt Servicing Ratio (TDSR)	MSR: Up to 30% of your monthly income TDSR: Not applicable	MSR: Up to 30% of your monthly income TDSR: Not more than 55% of your monthly income (your financial commitments, e.g., credit card bills, car loans and housing loans are part of the 55%)
Conditions to take a second HDB housing loan	The HDB housing loan will be granted only after paying for the flat purchase with full CPF refund and part of the cash proceeds received from the disposal of your: existing or last-owned HDB flat; last-owned private residential property disposed of for at least 30 months from the legal completion date, before HFE letter application. Find out more on the conditions to take a second HDB housing loan.	Not applicable
Early repayment of housing loan	No fees payable. Find out how to manage the payments of your HDB housing loan.	Fees may be payable, depending on the terms and conditions of the FI’s housing loan package (e.g., lock-in period).
Refinancing	You may refinance the HDB housing loan with one from an FI without any penalty.	You may refinance the FI housing loan with one from the same or a different FI. Do check with the FI on the terms and conditions (e.g., lock-in period). You cannot refinance to an HDB housing loan.

When applying for an HDB Flat Eligibility (HFE) letter, do apply for an In-Principle Approval (IPA) from the participating FIs via the HDB Flat Portal. The IPA will provide you with a preliminary assessment of your housing loan eligibility. Before you sign the Agreement for Lease with HDB or exercise an Option to Purchase for a resale flat, you may request to convert your IPA into a Letter of offer via the HDB Flat Portal.

Check your eligibility and apply for a housing loan

Find out how much you can borrow and the financing requirements.

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Apply for an HDB Flat Eligibility (HFE) letter for a holistic understanding of your housing and financing options before you embark on your home buying journey.  The HFE letter will inform you upfront of your eligibility to purchase a new and/or resale flat, as well as the amount of CPF housing grants and HDB housing loan that you are eligible for. 

As part of the integrated loan application service, you can concurrently request for In-Principal Approvals (IPA) from the participating FIs to find out your eligibility for a housing loan, when you apply for an HFE letter. After you have secured a flat, you can request an Letter of Offer (LO) for the confirmed loan amount from your chosen FI through the HDB Flat Portal. 

Apply for the housing loan from your preferred financier early to find out how much you can borrow before proceeding to find a flat that is within your housing budget. Do note that there is no mortgage loan for the purchase of a short lease 2-room Flexi flat or Community Care Apartment; you have to pay for the flat using your cash and/ or CPF savings.

Find out the financing requirements to apply for:

• Housing loan from HDB
• Housing loan from FIs

Considerations for financial sustainability

Minimise the housing loan amount and repayment period to save interest costs.

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As the purchase of a flat is a long-term commitment and payment of the monthly instalments may stretch up to 25 years or more, it is important to exercise prudence to minimise borrowing and ensure that the monthly payment is what you can sustain.

Take a long-term view by considering the following:

Cater for future changes

Your ability to keep up with the monthly loan instalments may be affected by: Increase in household expenses (e.g., children’s education, healthcare for aged parents) Unforeseen circumstances that may lead to reduction in income (e.g., retrenchment, business failure, medical conditions) Changes in mortgage loan interest rate, CPF contribution rates, or the applicable limits for CPF usage over the years. This means that you may need to use more cash to meet future loan instalments. Hence, consider paying in cash upfront to reduce the loan amount required to give yourself more flexibility to deal with emergencies and future expenses. You can also save on interest payments by taking a smaller housing loan amount or shorter loan period.

Choose a shorter repayment period

A longer repayment period means that the mortgage loan amount will be repaid at a slower pace and more interests will have to be paid. Opting for a shorter loan repayment period is more prudent as there is a shorter period of exposure to fluctuations in loan interest rates, incomes and expenses, etc. In addition, you will also save on the interest payments. Target to pay off your mortgage loan as soon as possible so that you can start saving more for retirement. It may be a stretch if you are paying off your mortgage loan and preparing for retirement at the same time.