Update: This article has been updated to reflect the latest changes in the Total Debt Servicing Ratio (TDSR) to 55%, and the Loan-to-Value (LTV) limit to 85% for HDB loans.
If you’ve decided to take an HDB loan for your HDB flat, securing an HDB loan eligibility (HLE) letter is essential. In this article, we look at the HDB HLE application process and HDB loan eligibility conditions in 2022, as well as what else you need to know when taking a loan from HDB.
In this article, we’ll cover all things on HDB HLE application from how to apply for an HDB concessionary loan to checking your HLE application status and HDB downpayment.
1. What Are the HDB Loan Eligibility Conditions?
The main difference between a bank loan and an HDB concessionary loan is the list of criteria that you have to meet. In the case of a bank loan, usually, all you’ll need is a healthy credit score, but HDB loans come with several conditions you need to meet in order to for you to be eligible for an HDB loan.
This is what is known as HDB loan eligibility, more commonly known as HDB HLE.
If you are a first-time applicant for an HDB loan, you’ll have to meet these conditions, according to HDB:
HDB HLE Criteria: Citizenship
- At least one Singapore Citizen (SC) buyer
HDB HLE Criteria: Household Status
- Have not previously taken two or more housing loans from HDB
- Have taken one housing loan from HDB and the last owned property is not private residential property (local or overseas), including a HUDC flat, a property acquired by gift, a property inherited as a beneficiary under a will or as a result of the Intestate Succession Act, a property owned/acquired/disposed of through nominees.
HDB HLE Criteria: Income Ceiling
| Family nucleus | Income ceiling |
| Single | $7,000 for a 5-room or smaller resale flat or a 2-room new flat in a non-mature estate under the Single Singapore Citizen (SSC) Scheme |
| Family | $14,000 |
| Extended family | $21,000 |
HDB HLE Criteria: Ownership
- Must not own or have disposed of any private residential property in the 30 months before the date of HDB HLE application for an HDB HLE letter.
- You can’t own a private residential property (local or overseas), which includes a property acquired by gift, a property inherited as a beneficiary under a will, or as a result of the Intestate Succession Act, a property owned/acquired/disposed of through nominees.
- You also do not own more than one market/ hawker stall or commercial/industrial property. If only one market/ hawker stall or commercial/industrial property is owned, you must be operating the business there, and have no other sources of income.
HDB HLE Criteria: Remaining Lease
- The HDB loan amount will depend on the extent the remaining lease can cover the youngest buyer to the age of 95.
Note that if your income stream is not salaried – for example, you do odd jobs, or freelancer work – your monthly income might undergo what’s known as a ‘haircut’ where only 70% of it is considered for the HDB HLE application.
HDB doesn’t regard the following as part of your monthly household income:
- Alimony or maintenance fees
- Bonuses
- Claims/reimbursement/expenses
- Director’s fees
- Dividend income or interest from deposit accounts
- Income from ad hoc overtime work
- National Service allowance
- Occupier’s income
- Overseas cost of living allowance
- Pension
- Rental income
- Scholarship overseas allowance
If you’ve met all the HDB loan eligibility requirements, you can then apply for the HDB HLE. Alternatively, if you’re still unsure or just want confirmation, you can take a questionnaire from HDB to find out whether you’re actually eligible for an HDB loan.
Do keep in mind that the amount you’ll be eligible to borrow will depend on the following:
- Loan to Value Limit (LTV): This is the maximum loan amount that can be issued to you for a particular property. It’s expressed as a percentage of the property’s market value. For HDB loans, it’s up to 85%.
- Mortgage Servicing Ratio (MSR): This refers to the portion of your monthly income that goes towards repaying property loans. It’s capped at 30% of your monthly income and only applies to housing loans for HDB flats and executive condominiums.
- Total Debt Servicing Ratio (TDSR): This refers to how much of your monthly income can go towards your monthly debt repayments. It includes all debt obligations, such as your credit card bills, car loans, student loans, and any property loans – including the one you’re applying for. Your TDSR should be less than or equal to 55%.
2. What Is the HDB Loan Eligibility (HLE) Letter?
In a nutshell, the HDB loan eligibility (HLE) letter is a document that states the loan amount that HDB is willing to lend to you. Apart from that, it will also state the following:
- Repayment period
- Monthly instalments
- Flat type
- Flat lease
- When the letter expires
The HDB loan amount and your CPF/cash savings, factoring in CPF Housing Grants, will then determine your available budget for the flat.
Your loan amount from HDB will depend on three key factors, which HDB uses to determine your ability to repay the HDB loan.
- Your age
- Your income
- Your financial standing
If you’re buying a Build-to-Order (BTO) flat, you’ll need to have the HDB HLE letter before you book the new HDB flat, or, in the case of a resale flat, before you sign your Option to Purchase (OTP). Note that the HDB HLE letter is valid only for six months.
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3. How to Apply for the HDB Concessionary Loan?
You’ll first need to apply for the HDB HLE letter online via HDB InfoWEB. This will entail providing your personal particulars as well as some financial documents for proof of income.
After getting the HDB HLE letter from HDB, you’ll need to upload the necessary documentation on the HDB portal, and then you’re done! HDB will usually share a reply to the outcome within 14 days of the outcome, and you can track your HDB HLE application status on the MyHDB portal.
Here is the list of documents to upload, depending on your type of employment and CPF contributions:
- An employee with CPF contributions
- Three months’ payslips
- Latest 15 month’s CPF contribution history
- An employee without CPF contributions
- 6+ months’ payslips
- Credit Bureau report
- Latest 6+ months’ bank statements/passbook
- Self-employed
- Latest Notice of Assessment from IRAS or Certified Annual Statement of Accounts from an auditing firm
- Credit Bureau report
- Latest 6+ months’ bank statements/passbook
- Commission-based, or part-time worker
- 6+ months’ commission statements or payslips
- Latest 15 month’s CPF contribution history
- Credit Bureau report
- Latest 6+ months’ bank statements/passbook
- Odd job worker
- Latest Notice of Assessment from IRAS or a recent letter from the employer certifying job designation, commencement date, and commission/salaries for 6+ months
- Latest 15 month’s CPF contribution history
- Credit Bureau report
- Latest 6+ months’ bank statements/passbook
- Unemployed
- Income proof for the preceding month(s) from the previous employer stating your gross monthly income and last day of service
- Latest 15 month’s CPF contribution history
Once your HDB HLE application status shows is successful, HDB will contact you to finalise your HDB loan such as whether you plan to pay the mortgage payments in cash, or through you and/or your co-applicants CPF Ordinary Account (OA).
4. How to Check Your HLE Application Status?
Upon completion of the HDB HLE application, you will receive an HDB HLE number. To check your HDB HLE application status, you may do so on HDB’s website by logging in with your NRIC and HLE reference number.
5. What Is the HDB Loan Interest Rate?
HDB lists the current interest rates of the HDB loan on its website. As of now, the current rate is 2.6%. On the other hand, several banks have raised their interest rates on fixed-rate loans in anticipation of additional interest rate rises in the US. Prior to these anticipated interest rate rises, the Monetary Authority of Singapore (MAS) has already issued a warning to Singaporeans about mounting mortgage debt.
Thus, it is worth noting that the interest rate for HDB loans has stayed consistent for quite some time. This stability is appealing to homeowners, who are then able to set aside an amount every month for the repayment without worry that the rate may suddenly arise. You can also borrow more – HDB loans allow you to finance up to 85% of the cost of your flat, whereas bank loans allow only up to 75%.
HDB interest rate is also pegged at 0.10% above the current CPF Ordinary Account (OA) Interest rate and may be adjusted in January, April, July, and October.
If you aren’t sure which loan to go for, you can check out a comparison of an HDB loan versus a bank loan.
6. What about the HDB Downpayment?
HDB lists down the payments you need to make on HDB’s website. If you have opted for the HDB loan, the HDB downpayment will be 15% of the purchase price. You can process the HDB downpayment through the savings in your CPF Ordinary Account (OA) and with cash. It is with noting that the HDB downpayment amount might factor heavily into your flat-purchasing decision.
For example, you and your spouse are looking at buying a particular flat, and after checking your CPF accounts, find that you only have a combined amount of $45,000. Unless you have sufficient extra cash to spare, it may be more feasible to look for an HDB flat that does not exceed $300,000. If you pick a more expensive flat, then you will have to pay the remainder of the HDB downpayment in cash.
Related articles:
- CPF Housing Grant/HDB Resale Grant: Should You Take It to Buy an HDB Flat in Singapore?
- HDB’s Staggered Downpayment Scheme for BTO Flat Downpayment: How Does it Work?
- Should I Pay off My Mortgage Early in Singapore? We Weigh 3 Pros and Cons
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