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SG Living

Guide to Financing a HDB Flat Purchase

By Lin Zhiqin

/ The Edge Property |

June 10, 2016 12:00 PM SGT

Buyers of HDB flats can finance their purchase using a combination of the following:

Savings

CPF savings

CPF housing grants

HDB concessionary housing loan or Bank loan

Cash must be used for the following:

Option fee (up to $1,000) and deposit (up to $5,000 minus the option fee) to seller

Part or full amount of the initial payment

If CPF savings are insufficient or

Taking a bank loan

Amount of purchase price not covered by CPF savings and housing loan

The maximum Loan-to-Value (LTV) ratio for a bank loan is 80%

Cash proceeds from the disposal of your existing or previous flat

This applies to borrowers taking a second HDB housing loan

CPF savings

CPF Ordinary Account (OA) savings can be used to finance a flat under the Public Housing Scheme (for HDB housing loans) and Approved Housing Scheme (for bank loans)

The CPF OA savings can be used for:

All or part of the purchase price

All or part of the initial payment (option fee and deposit)

Stamp duty, legal fees and other related costs such as flat upgrading

Monthly housing loan instalments

There are limits to the amount of CPF savings that can be used depending on:

Whether you are buying a new or resale HDB flat

Whether you are taking a HDB concessionary loan or bank loan

The limits that may apply are:

Valuation Limit (VL)

– the lower of the purchase price or market value at the time of purchase

Withdrawal Limit (WL)

– the maximum amount of CPF savings that can be used, capped at 120% of the VL

Buyers of new HDB flats with a HDB concessionary loan can use their CPF OA savings until the loan is fully paid

Loan From	Type of Home	Applicable Limits	Conditions to use CPF beyond VL
HDB	New flat	No limit	No conditions
Resale HDB flat/DBSS flat	VL	Buyers below 55 years old Must set aside the current Basic Retirement Sum (BRS) in your Special Account (SA) and Ordinary Account (OA). Buyers 55 years old and above Must meet the BRS in your Retirement Account (RA), SA and OA. including the amount withdrawn for investment.For bank loan, you can only use your CPF up to WL.
Bank	New HDB flat/Resale HDB flat/DBSS flat	VL and WL

CPF housing grants

Singapore citizens may be eligible for CPF housing grants that are given in the form of CPF OA savings. The grants can be used for the initial payment and reducing the amount of loan needed

Housing loan

Depending on eligibility, the Housing & Development Board (HDB) offers housing loans at a concessionary interest rate for the purchase of new or resale HDB flats

Housing loans are also available from banks

Key differences between HDB and Bank housing loan

	HDB	Bank
Which type of homes are eligible?	New HDB flat Resale HDB flat DBSS	New HDB flat Resale HDB flat DBSS Executive condominiums Private properties
Income ceiling	$12,000 for families $18,000 for extended families $6,000 for singles	No income ceiling
Loan-to-Value (LTV) ratio	Up to 90%	Up to 80%
Interest rate	Pegged at 0.1% above CPF rate = 2.6% per annum	Varies across banks
Maximum tenure	25 years	30 years
Minimum down payment in cash	$5,000	5% of purchase price

Source: HDB, CPF, The Edge Property

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