HDB Loan Eligibility, Interest Rates & Downpayment (2024)—A Beginner’s Guide

If you’re buying an HDB flat in Singapore, you often have the option of taking an HDB concessionary loan, better known as an HDB loan.

Compared to a bank loan, one big advantage of the HDB loan is that you can loan out a larger sum—80% of the flat price instead of 75%. That means your downpayment is smaller, making it possible for more people in different financial situations to afford a home.

If you’re thinking of applying for a BTO or buying a HDB, here’s everything you need to know from your HDB loan eligibility to the interest rates and how much downpayment you’ll have to make.

 

Guide to taking an HDB Loan

1. Are you eligible for an HDB concessionary loan?
2. What is the HDB loan interest rate?
3. What is the HDB loan downpayment?
4. Type of HDB flat – new or resale
5. Location and size of HDB flat
6. Cost and fees of buying a new HDB flat
7. Cost and fees of buying a resale HDB flat

 

1. HDB Loan Eligibility: Can I apply for a HDB loan?

The first thing to ask yourself before you take up a HDB loan is whether you’re eligible for the loan. Here are the main eligibility conditions you need to meet if you’re a first-time applicant for the HDB loan:

	HDB Loan Eligibility Conditions
Citizenship	At least one applicant is a Singapore Citizen
Household income	Maximum $7,000 for singles, $14,000 for families (couples, that’s you), $21,000 for extended families*
Private property ownership	Must not own or have disposed of private property in the last 30 months before HFE letter application
Commercial property ownership	Maximum 1 market/hawker stall or commercial/industrial property

Note: If you own a market/hawker stall or commercial/industrial property, you have to be operating the business yourself and NOT earning income from any other sources.

* Extended families = You + your spouse + your children (who are earning an income) as co-applicants or occupiers.

If you meet all the above requirements, you should apply for the HDB Flat Eligibility (HFE) letter. You need to do this before you book a new flat from HDB or obtain an Option to Purchase from a resale flat seller.

Applying for an HFE letter is an easy, straightforward process that you can do from HDB’s website. Just make sure to apply ahead of time—for example, you should apply for an HFE by 15 May 2024 if you want to apply for a Jun 2024 BTO flat.

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2. What is the HDB loan interest rate?

The HDB loan interest rate is currently 2.60%. (It has remained at 2.60% for several years.)

Why is this the main question on many Singaporeans’ minds? Because it’s pretty high. In comparison, bank loan interest rates are usually lower. (Usually—currently this may not be the case. )Bank loan interest rates are usually only valid for 2 to 3 years before you’ll have to refinance your bank loan.

In comparison, HDB loan interest rates have not changed at all, and that kind of stability is often appreciated by homeowners. Imagine not knowing ahead of time how much your monthly home loan repayment is going to be! You wouldn’t know how much to set aside. Those on an HDB loan know exactly what they’re paying each month, and it’ll be the same today as it was 5 years ago.

However, that’s not to say the HDB loan interest rate will never change—it is always 0.1% higher than the CPF Ordinary Account interest rate. Currently, the CPF Ordinary Account interest rate cannot go lower than 2.50%, so if the HDB loan interest rate changes, it can only increase, never decrease.

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3. What is the HDB loan downpayment?

The HDB loan downpayment used to be 10% of the purchase price.

From 16 December 2021, Singapore’s government stealthily increased the HDB loan downpayment to 15% at midnight. From 30 September 2022, the HDB loan downpayment was once again increased to 20%. This came as part of a new wave of property cooling measures aimed at discouraging citizens from buying properties only to rent them out for passive income.

Besides the higher downpayment required, everything else has remained the same. The HDB loan amount can be paid in cash or from your CPF Ordinary Account. But 20% is really no joke for some of us trying to make ends meet. Hence, this 20% downpayment should be a huge deciding factor whether you should take up a HDB loan.

Let’s assume you are buying a flat under the Fiancé/Fiancée Scheme. If you and your partner check your CPF Ordinary Accounts and you only have $60,000 combined in there, then you should probably look for an HDB flat that costs no more than $300,000. Choosing a more expensive flat means you will need to pay the rest of downpayment by cash.

It’s always a good idea to find out how much downpayment you can afford to pay before choosing a flat. That’s because you can compromise on renovation costs or furniture costs when buying a flat, but you can never compromise on the downpayment, unless you win first prize in Toto.

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4. Type of HDB flat – new or resale

Your first decision when choosing an HDB flat to buy is between a new HDB flat (aka a Build-To-Order flat, or BTO), or a resale HDB flat. There are several factors to consider in this decision, always keeping in mind the downpayment.

Type of HDB flats	Advantages	Disadvantages
Built-to-Order (BTO) flats	Cheaper	Waiting time of up to 6 years
Resale flats	Short waiting time	More expensive
Sale of Balance Flats	Sold at BTO prices Short waiting time	Limited units to choose from

HDB BTO flats are usually significantly cheaper than resale flats. A 4-room BTO flat in Sengkang can cost as little as $400,000 while a 4-room resale flat in the same area can cost around $850,000. So if you’re planning to get an HDB loan, you’re looking at a downpayment of $80,000 vs $170,000. That’s a pretty significant difference.

However, you will need to ballot for an HDB BTO flat, usually competing with twice as many applicants as there are available units. Assuming you’re lucky enough to get a BTO, you then have to wait as long as 6 years for the flat to be ready. Trust me, a lot of fights, quarrels, break ups, and babies can happen in 6 years.

Resale flats, on the other hand, can be snapped up in a matter of days, once negotiations with the seller are complete.

However, an in-between option was released by HDB–the Sale of Balance Flats (SBF). These are units that are either unsold or sold and returned to HDB for whatever reason. They are often significantly cheaper than a resale flat because they’re sold at BTO prices, and you don’t need to wait for years before moving in, unlike a regular HDB BTO.

Of course, the main disadvantage is you are given limited options to choose from—that is, in an entire block there may only be one or two units you can buy. Not only is that limiting in the number of options, but it also means SBF is a very competitive route to take.

 

5. Location and size of the HDB flat

Once you’ve decided on the type of HDB flat, your next decision is the location and size of the HDB flat. Again, how much of a downpayment you can afford should help you with your decision. Here’s a full guide to HDB downpayment for you to map out your finances.

Location matters when it comes to cost. In Singapore, housing estates are divided into mature and non-mature, with mature estates being at least 20 years old. Mature estates usually come with lots of convenient amenities like schools, medical facilities, supermarkets and so on. Thus, flats in mature estates will be significantly more expensive than those in non-mature estates.

For example, according to the median resale prices in Q1 2024, the median price of a 4-room resale flat in Bukit Batok (a non-mature estate) is $591,500, while a 4-room resale flat in Bukit Merah (a mature estate) can cost around $895,000.

Note: The Jun 2024 BTO will be the last round of BTO using the mature and non-mature town distinction. After this, the Standard, Plus, and Prime model will be used instead.

Of course, it also goes without saying that size does matter as well. A larger flat will cost you more than a smaller one, sometimes as much as two times the price!

For example, the median price of a 3-room resale flat in Ang Mo Kio is around $399,000, while the median price of a 5-room resale flat in the same town is $905,000.

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6. Cost of buying a BTO or new HDB flat

Other than the main cost of the flat, there are other costs involved. Many of these costs are regardless of whether you’re taking an HDB loan or a bank loan.

Item	Amount	Payment mode
Online application for HDB flat	$10	Credit or debit card
Option fee	$500 (2-room Flexi BTO) $1,000 (3-room BTO) $2,000 (4-or 5-room BTO)	NETS
Stamp duty	Based on selling price, e.g. $6,600 for $400,000 flat. Use our stamp duty calculator!	Cash or CPF
HDB Conveyancing fee	First $30,000: $0.90 per $1,000 Next $30,000: $0.72 per $1,000 Remaining Amount: $0.60 per $1,000	Cash or CPF
Registration and microfilming fees	Lease In-Escrow registration fee: $38.30 (fixed amount) Mortgage In-Escrow registration fee (if you are taking a home loan): $38.30 (fixed amount) Title search fee: $32	Cash or CPF
HDB Caveat Registration fee	$128.90	Cash or CPF
Downpayment	20% of purchase price	Cash or CPF
Survey fees	$162 – $405, depending on flat size	Cash or CPF
Home Protection Scheme annual premium	Varies depending on buyer and loan type. For a $400,000 BTO flat with a loan term of 20 years, the annual premium is $175.60.	CPF
Fire Insurance Scheme 5-year premium	Up to $8.25, depending on flat size	Cheque/Cash

Source: CPF

Note that the option fee will be refunded to you if you complete the flat purchase, but forfeited if you do not. Think of it like a deposit.

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7. Cost of buying a resale HDB flat

Here are the cost and fees of buying a resale HDB flat. Again, many of these costs are incurred, regardless of whether you’re taking an HDB loan or a bank loan.

Item	Amount	Payment mode
Resale application admin fee	$40 (1- and 2-room) / $80 (3-room and bigger)	Credit or debit card or GIRO
Option fee	Up to $1,000	Credit or debit card or GIRO
Request for Value processing fee	$120	Credit or debit card or GIRO
Stamp duty	Based on selling price, e.g. $4,200 for $300,000 flat	Cash or CPF
HDB Conveyancing fee	First $30,000: $0.90 per $1,000 Next $30,000: $0.72 per $1,000 Remaining Amount: $0.60 per $1,000	Cash or CPF or NETS
Downpayment	20% or 25% of purchase price	Cash or CPF
Home Protection Scheme annual premium	Varies depending on buyer and loan type. For a $400,000 flat with a loan term of 20 years, the annual premium is $175.60.	CPF
Fire Insurance Scheme 5-year premium	Up to $8.25, depending on flat size	Cheque

Source: CPF

Do note that for the HDB Conveyancing fee are part of the legal fees if you wish to have HDB’s lawyers acting for you. Either way, you will still need to pay stamp duty, registration and other miscellaneous fees.

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