HDB Loan: Maximum 75% loan limit (Same as bank loans)

Thinking of getting an HDB flat? One of the biggest decisions you’ll make is how to pay for it, and for most Singaporeans, that means considering an HDB home loan. It can all seem a bit confusing, but don’t worry, we’ve broken down the key things you need to know in simple, no-nonsense language.

HDB Loan vs. Bank Loan: What’s the Difference?

When you’re buying an HDB flat, you have two main options for a home loan: a loan from HDB or one from a commercial bank. The HDB loan is often a popular choice for a few key reasons. First off, it’s only available for HDB flats and it’s regulated by the government, which makes it feel a bit more stable and reliable. The interest rate is a steady 2.6%, which is tied to the CPF Ordinary Account (OA) interest rate. This makes it a predictable choice, as the rate doesn’t fluctuate much.

A bank loan, on the other hand, is offered by commercial banks and can be used for both HDB and private properties. The interest rates are typically lower than the HDB loan at the start but can be variable, so they might change over time. This means you could end up paying more in the long run if rates go up. Bank loans also have stricter eligibility criteria, and they’re generally less flexible.

Who Can Get an HDB Loan?

Not everyone is eligible for an HDB loan. There are a few key criteria you have to meet, including a maximum household income limit.

The HDB loan income ceiling is currently capped at S$14,000 per month for families and S$7,000 per month for singles. You also can’t own any other private property in Singapore or overseas. These rules are in place to ensure that HDB loans are available to those who need them most.

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HDB Loan Limit

So you’ve figured out you’re eligible. Now, how much can you actually borrow? The HDB loan amount you can get depends on a few factors, mainly your age, income, and the remaining lease of the flat. The loan limit is the maximum amount HDB is willing to lend you.

Currently, HDB can loan up to 75% of the flat’s purchase price or its market value, whichever is lower. This is a bit lower than the past, so it’s a good idea to use an HDB loan calculator to figure out your exact loan amount and monthly repayments.

When it comes to the downpayment, HDB requires a minimum of 25% of the purchase price, which is made up of your savings in your CPF Ordinary Account and/or cash. For a bank loan, the downpayment is the same, at a minimum of 25%.

The HDB loan tenure can be up to 25 years, which is the maximum amount of time you have to pay back the loan. This gives you a lot of flexibility to manage your monthly finances.

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Getting a Bank Loan for Your HDB Flat

Even if you’re buying an HDB flat, you can still opt for a bank loan. This might be a good idea if your income exceeds the HDB loan ceiling or if you prefer a lower, albeit variable, interest rate. Banks can also loan you up to 75% of your home’s value. It’s a good idea to compare the various interest rates and terms from different banks before making a final decision.

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Part of this article was first published in The Straits Times.