So, you’re planning to buy an HDB flat in 2023 and you’ve decided to take an HDB-granted loan for your home purchase. Securing an HDB loan eligibility (HLE) letter then becomes essential.
In this article, we’ll look at the HDB HLE application process and HDB loan eligibility conditions. We’ll also cover how to apply for an HDB loan and how to check your HLE application status and HDB down payment.
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 you must meet. In the case of a bank loan, usually, all you’ll need is a healthy credit score, but HDB-granted loans come with several conditions. This is what is known as HDB loan eligibility.
If you are a first-time applicant for an HDB-granted loan, you’ll have to meet these conditions, according to HDB:
HDB HLE Application Criteria: Citizenship
- At least one Singapore Citizen (SC) buyer
HDB HLE Application 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 Application 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 Application Criteria: Ownership
- Must not own or have disposed of any private residential property in the 30 months before the date of 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 Application Criteria: Remaining Lease
- The 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 your income is considered.
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 determine your eligibility status.
Do keep in mind that the amount you’ll be eligible to borrow will depend on the following:
- Loan-to-Value (LTV) ratio: 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 value. For HDB-granted loans, it is 80%.
- 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%.
HDB Loan Calculator
Called HDB loan calculator, you can find out your estimated budget by simply indicating the amount you would like to use for the flat purchase. To make things easier when using the HDB loan calculator, you can also retrieve your information using Singpass. Before using the HDB loan calculator, you can also import the details of your HLE letter by logging in.
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 loan amount and your CPF/cash savings, factoring in CPF housing grants, will determine your budget for the flat.
Your loan amount from HDB will depend on three key factors:
- 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.
3. How to Apply for the HDB Concessionary Loan?
You’ll 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 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 months’ 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 months’ 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 months’ 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 months’ CPF contribution history
If you are successful, HDB will contact you to finalise your loan such as whether you plan to pay the mortgage payments in cash or via CPF OA monies.
4. How to Check Your HDB HLE Application Status?
Upon completing the HDB HLE application, you will receive an HDB HLE number. To check your HDB HLE 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-granted loan on its website. As of now, the current rate is 2.6%. 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.
On the other hand, a quick search on the PropertyGuru mortgage comparison tool reveals bank loan interest rates are 3.28% and up (accurate as of 3 January 2023).
It is worth noting that the interest rate for the HDB concessionary loan 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.
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 Down Payment?
HDB lists the payments you need to make on HDB’s website. If you have opted for the HDB loan, and score the maximum 80% LTV ratio, the HDB down payment will be 20% of the purchase price. You can process the HDB down payment through savings in your CPF Ordinary Account (OA) and with cash. It is with noting that the HDB down payment 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 down payment in cash.
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