The path to home ownership in Singapore is often a difficult, convoluted and arduous task, made even more complicated with the realities of Covid-19.
Chances are, you landed upon this article about buying a condo because you’re trying to check out all your housing options before settling for one that suits your circumstances.
Here’s all the information you need about that all-important condo downpayment in Singapore so you can decide on what to do next as a first-time home buyer.
Why would first-time home buyers splash out on a condo?
In the past, it was a standard rite of passage for Singaporean first-time home buyers to purchase an HDB BTO flat, then upgrade to a condo at some point.
But Covid-19 has complicated a lot of things, to put it very lightly. Last we heard, HDB BTO flats, will be delayed for another year or more with the tighter Covid-19 restrictions. Not great news if you’re looking to move out of your parents’ place ASAP.
Chanel Li, 23, owner of Whisking Bakes and prospective first-time BTO homeowner, notes her frustration from the slow process. “We applied for the September 2019 [BTO], but they told us it may only be ready from October 2023 to January 2024”. This is at least a four-month delay from the initial time frame of June to September 2023.
Earlier in 2020, 99.co reader Dawn Tan wrote about her BTO experience. After waiting almost a year just to get a queue number, only to have her application rejected, she decided to get an executive condominium (EC) instead.
And then there are the restrictions around buying an HDB flat — you need to be a citizen, form a nuclear family (or be over 35) and be earning within the income ceiling. Not to mention the absurd 7-digit resale flat prices.
It’s no wonder first-time home buyers like you might be considering buying a condo instead.
How much is the condo downpayment in Singapore for first-timers?
If you were wondering how much you need to have on hand to buy a condo — and be done with the circus that is public housing — this article is for you.
There are quite a few factors that affect your condo downpayment in Singapore:
- Loan-to-Value (LTV) Limit: the amount that you can borrow from the bank
- The outstanding condo downpayment, which you can use your CPF to pay partly
- The minimum cash downpayment, which must come from your bank account
- Stamp Duty (BSD and/or ABSD), which you must pay in cash first (then request a reimbursement from CPF)
These factors vary depending on the price of the condo. For simplicity’s sake, let’s assume you’re looking for a small condo in a non-central neighbourhood, and you’ve found a unit going at $800,000.
The table below breaks down the costs you need for your condo downpayment in Singapore:
|Singaporeans||Permanent Residents (PRs)||Foreigners|
|Loan-to-Value Limit (75%)||$600,000||$600,000||$600,000|
|Outstanding Condo Downpayment (25%)||$200,000||$200,000||$200,000|
|Minimum Cash Downpayment (5%)||$40,000||$40,000||Not Applicable|
|Stamp Duty (BSD + ABSD)||$18,600 (calculator here)||$58,600 (calculator here)||$258,600 (calculator here)|
|Total Condo Downpayment (CPF + cash)||$218,600||$258,600||$458,600|
|Cash money you must have on hand||$58,600||$98,600||$458,600|
How much do I need in cash + CPF for my condo downpayment?
In case you didn’t know already, you can use your CPF funds to pay for your condo downpayment. The funds have to come from your Ordinary Account (OA).
In the above mentioned example, the up-and-coming condo costs $800,000. You have a total downpayment of $200,000, or 25% of the condo’s price — this hefty amount has been required by law since 2018.
Of this $200,000, you’ll need to pay at least $40,000 in cash, i.e. 5% of purchase price.
The remaining amount can be borne from your CPF OA. This equates to $160,000, or 20% of purchase price.
But wait! Do you have $160,000 in your CPF account!? If you’re a regular salaried worker earning a pretty high income of $4,000/month, it’ll take a little over 8 years for your OA to accrue that much. Ooft. That’s a long time.
So if your CPF OA isn’t quite as flush, you’ll need to pay more than $40,000 in cash for your condo downpayment.
Do I need to pay stamp duty (BSD or ABSD) in cash?
Buyer’s Stamp Duty (BSD) is an extra cost you need to factor in when saving up for your condo downpayment. It’s applicable on all residential property purchases, regardless of whether you’re a first-time buyer.
Here’s a screenshot from IRAS to show you how it’s calculated:
For an $800,000 condo unit, the Buyer’s Stamp Duty is $18,600 (calculator here). If you’re a Singapore citizen, that’s “all” you have to pay.
But if you’re a PR or foreigner, you’ll need to factor in Additional Buyer’s Stamp Duty. For your first property purchase, PRs need to pay a tax of 5% while foreigners get taxed 30%.
In total, PRs need to pay BSD + ABSD of $58,600 (calculator here), while foreigners need to cough up BSD + ABSD of $258,600 (calculator here).
You can use CPF OA to pay Stamp Duty, but it’s on a reimbursement basis. This means that you still have to fork out the funds from your bank account.
And obviously, your CPF needs to have enough balance to reimburse you in the first place.
How much are the monthly repayments for my condo with a home loan?
Thought coughing up the hefty downpayment was hard? Wait till you hear about the monthly repayments for your condo.
Right now, typical home loan bank rates hover around 1.25% to 1.6% p.a., with a lock-in period of 1 to 2 years. Check best available rates from all banks on MoneySmart.
|Bank||Monthly Instalment||1st year interest||Lock-in period|
|Maybank 3M SORA||$2,740.67||0.93%||1 year|
|Standard Chartered 3M SORA||$2,740.67||0.93%||2 years|
|DBS 3M SORA||$2,740.67||0.93%||3 years|
|OCBC 1M SORA||$2,751.34||0.97%||2 years|
|HSBC 1M SORA SmartMortgage||$2,751.34||0.97%||2 years|
For a condo that costs $800,000, you’re looking at a monthly repayment of at least $2,740 for 20 years.
The above mentioned rates assume that you take up a fixed home loan, but there are many other types of home loans, such as the different types of floating home loans (SORA vs Board). Do note that after the lock-in period, these fixed home loan interest rates will revert to the floating rates.
Always keep up to date with the interest rates and do not hesitate to refinance your home loan if need be!
Do I have enough money for a condo downpayment?
To summarise, Singaporeans need at least $160,000 in CPF OA and $58,600 cash on hand for a condo downpayment. (If you do not have enough in your CPF OA, you’ll need to pay more in cash.)
If you’re weighing that against the other options, here are guides for you to mull over:
Most home purchases follow a similar structure: work out your downpayment from the borrowing limit, then how much you have in your CPF vs cash you actually need to pay. Your circumstances may be unique, which is why we have tools for you to work out what’s best for you.
But if you’ve got your heart set on a condo unit, then you definitely need to work and save hard for that 6-digit sum.
Consider low-risk investments to attain higher returns if you have years to save for your condo downpayment. Otherwise, your best bet would be side gigs and other income streams for extra cash in the short term.
Do you know someone who might find this article useful? Share this knowledge with them!