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. Before you apply for an HDB loan, read our ultimate guide to everything you need to know and all that it will cost you.
Update: As of 16 December 2021, the Singapore government introduced new property cooling measures which will see the HDB loan reduced from 90% to 85% (means you will have to pay more in downpayment). If your HDB flat selection appointment is today… we’re so sorry for you.
Is that a significant change? Read on for our detailed breakdown.
Contents
- Are you eligible for an HDB concessionary loan?
- What is the HDB loan interest rate?
- What is the HDB loan downpayment? (Updated Dec 2021)
- Type of HDB flat – new or resale
- Location and size of HDB flat
- Cost and fees of buying a new HDB flat
- Cost and fees of buying a resale HDB flat
1. Who can apply for an HDB loan?
The first thing to ask yourself before you take up an HDB loan is whether you are 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 buyer is a Singapore citizen |
| Household income | Maximum $12,000 for families, $18,000 for extended families, $6,000 for singles |
| Private property ownership | Must not own or have disposed of private property in the last 30 months |
| 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.
If you meet all the above requirements, you should apply for the HDB Loan Eligibility letter (HLE). You need to do this before you book a new flat from HDB or obtain an Option to Purchase from a resale flat seller. Fortunately, the HLE letter is valid for 6 months, so there’s no excuse.
Applying for a HLE is an easy, straightforward process that you can do from HDB’s website.
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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 have not exceeded 2% in almost a decade.
However, 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 five 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.
However, as of 16 December 2021, Singapore’s government stealthily increased the HDB loan downpayment to 15% at midnight, surprising the country. 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.
How will this change in HDB loan downpayment affect you? Nothing much. Just pay more money only.
Everything else remains the same. The HDB loan amount can be paid in cash or from your CPF Ordinary Account. But 15% is really no joke for some of us trying to make ends meet. Hence, this 15% downpayment should be a huge deciding factor whether you should take up a HDB loan.
Assuming you are buying a flat under the Fiancé/Fiancée Scheme. If you and your partner check your CPF Ordinary Account and you only have $30,000 combined in there, then you should probably look for an HDB flat that costs no more than $200,000. 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 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 $283,000 while a 4-room resale flat in the same area can cost around $510,000. So if you’re planning to get an HDB loan, you’re looking at a downpayment of $42,450 vs $76,500. 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. 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, and you don’t need to wait for years before moving in, unlike an 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.
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.
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, a 4-room resale flat in Bukit Batok (a non-mature estate) can cost around $549,999, while a 4-room resale flat in nearby Clementi (a mature estate) can cost around $558,000.
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, a 3-room resale flat in Bedok can cost around $468,000 while a 5-room resale flat in Bedok can set you back by $750,000.
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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 | Up to $2,000, depending on flat size | NETS |
| Stamp duty | Based on selling price, e.g. $4,200 for $300,000 flat | Cash or CPF |
| Legal fees | At least $257, depending on selling price | Cash or CPF |
| Downpayment | 15% of purchase price | Cash or CPF |
| Survey fees | Up to $375, depending on flat size | Cash or CPF |
| Home Protection Scheme annual premium | Varies depending on buyer and loan type | CPF |
| Fire Insurance Scheme 5-year premium | Up to $7.50, depending on flat size | Cheque |
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 | Up to $80 | 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 |
| Legal fees | At least $257, depending on selling price | Cash or CPF or NETS |
| Downpayment | 15% of purchase price | Cash or CPF |
| Home Protection Scheme annual premium | Varies depending on buyer and loan type | CPF |
| Fire Insurance Scheme 5-year premium | Up to $7.50, depending on flat size | Cheque |
Do note that for the legal fees, it depends on whether to you wish to have HDB’s lawyers acting for you or not. Either way, you will need to pay conveyancing fees, stamp duty, registration and miscellaneous.
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Further reading on home loans:
Home Loans in Singapore – The Complete Guide to Property Loans
Best Home Loans Singapore (2018) – Most Affordable Housing Loans Reviewed
HDB Loan vs. Bank Loan: Which is Better?
Header image credit: Muhd Asyraaf
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Original article: HDB Loan – A Beginner’s Guide To HDB Loan (With Property Cooling Measures Update Dec 2021).
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