Share this article
The Loan-to-Value (LTV) limit is a crucial financial ratio in Singapore that determines the maximum amount you can borrow for a property loan. Simply put, it’s the percentage of a property’s value that a bank or the Housing & Development Board (HDB) is willing to lend you.
For example, if the LTV limit is 75%, it means you can get a home loan for up to 75% of the property’s price or valuation (whichever is lower). The remaining 25% must be paid as a down payment, using a combination of your CPF Ordinary Account savings and cash.
What is the LTV limit in Singapore?
LTV limits in Singapore haven’t been static; they’ve been adjusted over time as a key tool to manage the property market. They were first formally implemented in the mid-1990s as a measure to promote sound lending practices and prevent over-leveraging. The LTV limits have been tightened during periods of a booming property market to cool prices and ensure financial stability.
Loan to Value (LTV) Limit HDB
| Date | HDB LTV Limit |
|---|---|
| Before 2010 | 90% |
| 2010 | 90% |
| December 2021 | 85% |
| September 2022 | 80% |
| August 2024 | 75% |
| 2025 | 75% |
For instance, the LTV limit for HDB loans was at 90% for a long time, but as the HDB resale market heated up, it was progressively lowered to 85% in 2021, 80% in 2022, and most recently to 75% in 2024 to encourage more prudent borrowing among flat buyers. These adjustments are a clear sign of the government’s proactive approach to managing the housing market.
Loan to Value (LTV) Limit for Bank Loans
Here’s the bank loan LTV limit over the years (we’re only looking at first home loan):
| Date | Bank Loan LTV Limit | Minimum Cash Downpayment |
|---|---|---|
| Before 2010 | Up to 90% | 5% |
| February 2010 | Up to 80% | 5% |
| January 2013 | 80% | 5% |
| August 2013 | 80% | 5% |
| July 2018 | 75% | 5% |
| 2025 | 75% | 5% |
Why does LTV Limit Exist in Singapore?
The primary purpose of LTV limits in Singapore is to promote financial prudence and ensure a stable and sustainable property market. They exist for two main reasons:
Prevents Over-Borrowing
First, they protect borrowers from over-extending themselves. By requiring a significant downpayment, LTV limits ensure that buyers have a personal stake in their property and are not over-leveraged. This reduces the risk of default, particularly if there’s a sudden downturn in the economy or a rise in interest rates, as buyers are more likely to have the financial capacity to continue their loan repayments.
Property Cooling Measures
Second, LTV limits are a powerful tool used by the government to manage property prices and prevent speculative bubbles. When property prices rise too quickly, the government can lower the LTV limit. This makes it harder for people to buy property, as they need to come up with more cash and CPF for the downpayment. This helps to reduce demand and cool the market, ensuring that property prices remain in line with economic fundamentals and don’t become unaffordable for the average citizen.
Is 75% LTV limit enough?
Compared to many other developed countries, Singapore’s 75% LTV limit is considered quite conservative. This conservative stance is a deliberate and key part of Singapore’s strategy to maintain a stable housing market and prevent a build-up of household debt.
By requiring a 25% down payment, Singapore ensures that all HDB and private property borrowers have a substantial equity stake in their home from the very beginning. This makes them less vulnerable to negative equity if property values decline and reduces the risk of default on their loans.
For example, in the U.S., LTVs of 80% are a common standard for conventional mortgages. Borrowers with good credit can sometimes secure loans with LTVs as high as 95% or even 96.5% through government-backed programs (like FHA loans), though this often requires the purchase of private mortgage insurance (PMI). This means borrowers can get a home loan with a down payment as low as 3.5%.
In the UK, LTV limits for standard residential mortgages are also typically up to 90% or even 95% for first-time buyers, though these higher LTV loans often come with higher interest rates.