The short answer in mid-2026: an HDB concessionary loan charges a fixed 2.6% a year, needs zero cash for the down payment, and lets you walk away and refinance to a bank whenever you like with no penalty. A bank loan is the cheaper headline right now, with fixed packages starting near 1.3% because SORA has dropped to about 1.07%, but it demands at least 5% of the price in hard cash, locks you in for one to three years, and once you take it you can never switch back to HDB. So the real choice is not about today's rate alone. It is about your cash on hand, whether you qualify for an HDB loan at all (income ceiling $14,000 for families), and how much rate risk you can stomach when the lock-in ends. This guide breaks down the 2026 numbers and tells you which loan fits which buyer.
For most of the last decade, the HDB loan at a flat 2.6% was the safe, slightly cheaper default and bank loans only won when you had spare cash and wanted to gamble on low floating rates. Mid-2026 has flipped the maths. The 3-month compounded SORA, the benchmark almost every bank floating loan is priced off, has fallen to roughly 1.07% from a peak near 3% in early 2025. That has pulled bank fixed packages down to around 1.3% to 1.7% a year, comfortably below HDB's 2.6%.
On rate alone, a bank loan wins today. But a home loan runs 25 years and you are not choosing the rate for one year, you are choosing a structure. The HDB loan never charges you a cent more than 2.6% no matter what rates do, asks for no cash down payment, and you can refinance out to a bank the moment bank rates look good. A bank loan gives you the low rate now, but locks you in, costs you cash upfront, and bars you from ever going back to HDB.
Run your own numbers before you commit. Model the monthly repayment against the HDB loan calculator for the concessionary path and the mortgage calculator for a bank package, using the same loan amount and tenure, so you are comparing like for like rather than headline rates.
Both loans now cap your borrowing at 75% loan-to-value (LTV), so the old advantage where HDB lent you a bigger slice is gone. HDB cut its LTV from 80% to 75% on 20 August 2024 to match bank loans, which means a 25% down payment either way. The difference is what that 25% can be paid with, and that is where the HDB loan still has a real edge for cash-tight buyers.
| Feature | HDB loan | Bank loan |
|---|---|---|
| Interest rate | 2.6% fixed (pegged 0.1% above CPF OA rate) | From ~1.3% to 1.7% fixed; floating from 3M SORA (~1.07%) + spread |
| Rate certainty | Never changes for the life of the loan | Resets after 1-3 year lock-in; can rise or fall |
| Max LTV | 75% of price or valuation (lower) | 75% of price or valuation (lower) |
| Down payment | 25%, payable fully from CPF OA, cash, or mix; no minimum cash | 25%, of which at least 5% must be cash; remaining 20% cash or CPF |
| Minimum loan | None | Typically $100,000 |
| Lock-in period | None | Usually 1-3 years |
| Early repayment penalty | None | Typically 0.75% to 1.5% of amount prepaid during lock-in |
| Refinance to the other | Can switch to a bank anytime | Cannot switch back to HDB, ever |
| Late payment charge | Set by HDB and reviewed bi-annually (5.6% per year for 1 Apr to 30 Sep 2026) | Varies by bank, often higher and stricter |
| Income ceiling to qualify | $14,000 (families), $7,000 (singles) | No HDB income ceiling; subject to bank credit checks |
The HDB rate is the easiest number in Singapore housing. It is fixed at 2.6% a year and has sat there since 1999, because it is pegged at 0.1% above the CPF Ordinary Account (OA) rate. The CPF OA rate is itself floored at 2.5%, so unless that floor is raised, HDB's 2.6% does not move. It is reviewed quarterly in January, April, July and October, and for 1 January to 31 March 2026 it stayed at 2.6%.
Bank rates move with the market. A bank package is either fixed for an introductory period (one, two or three years) or floating, priced as a benchmark plus a fixed spread, for example 3-month compounded SORA plus 0.5%. With SORA around 1.07% in June 2026, a SORA-plus-0.5% loan costs roughly 1.6%, and several banks advertise fixed rates from about 1.3%. That is a meaningful gap below 2.6%.
The catch sits at the end of the lock-in. When your one-to-three-year fixed period expires, the package usually reverts to a higher floating rate, and you either accept it or refinance again. If SORA climbs back toward 3% as it did in 2025, your once-cheap bank loan can overtake the steady HDB 2.6%. The HDB loan trades a slightly higher rate today for never having to think about this. To see how a percentage point swings a 25-year repayment, compare scenarios in our fixed vs floating mortgage comparison.
This is the difference that decides it for many first-time buyers. Both loans need a 25% down payment, but the cash rule is not the same. With an HDB loan, the entire 25% can come from your CPF Ordinary Account, cash, or any mix. There is no minimum cash component. If you have enough in your OA, you can buy your flat without touching your bank balance for the down payment.
A bank loan forces a cash floor. Of the 25% down payment, at least 5% of the purchase price must be paid in cash, and only the remaining 20% can come from CPF OA or more cash. On a $500,000 flat, that is $25,000 in cash you must produce on top of whatever CPF you put in. For a young couple who have most of their savings locked in CPF and little in the bank, that 5% cash wall is often the deciding factor, regardless of which loan has the lower rate.
CPF also differs after you move in. On an HDB loan you can choose to retain up to $20,000 of your OA savings as a buffer; on a bank loan you can keep any amount and CPF Board recommends holding at least $20,000 back. Either way, leaving some OA untouched matters because it keeps earning interest and acts as a cushion if your income dips. The OA pays a floor rate of 2.5% a year, and members below 55 earn an extra 1% on the first $20,000 of OA, so that first slice can earn up to 3.5%. Work the full cash-plus-CPF picture into your personal budget before you decide.
The 5% cash floor on a bank loan is the headline, but it is not the whole cash bill. Two more items can land mostly in cash on completion day, and buyers who budget only for the down payment get caught short. The first is Buyer's Stamp Duty (BSD), which every buyer pays regardless of loan type. The second, on resale flats, is Cash Over Valuation (COV).
BSD is tiered: 1% on the first $180,000 of the price or valuation (whichever is higher), 2% on the next $180,000, 3% on the next $640,000, and 4% above $1 million. On the $533,000 resale flat in our worked example, that is $1,800 plus $3,600 plus $5,190, so $10,590 in BSD. You can pay BSD from CPF OA, but only by reimbursement: it must be settled in cash first within 14 days, then claimed back from CPF. So even the stamp duty starts life as a cash outlay you need on hand.
COV bites only on resale flats and only when the agreed price sits above HDB's valuation. Since valuations are issued only after the option is granted, a buyer who agrees a price above what the flat later values at must pay that gap entirely in cash. CPF and the loan are both capped at the valuation, never the higher price. A $20,000 COV is $20,000 in cash on top of everything else, on either loan. This is one reason a bank loan on a resale flat can demand far more cash than the bare 5% suggests, and why pricing close to valuation matters. Add stamp duty, legal and valuation fees, and any COV to the down payment in your stamp duty calculator and personal budget before you commit.
The HDB loan is not open to everyone, and that decides the question for a chunk of buyers. You need an HDB Flat Eligibility (HFE) letter before you can apply for any flat or loan, and the loan side of it checks several conditions. At least one buyer must be a Singapore Citizen. Your average gross monthly household income cannot exceed $14,000 for families or $7,000 for singles ($21,000 for extended or multi-generation families). You must not own or have an interest in any other property, locally or overseas, and must not have disposed of a private property in the 30 months before your HFE application. And you cannot have taken two or more HDB housing loans before.
If you breach any of these, the bank loan is your only route, and that is common for higher earners. A dual-income couple clearing $14,000 a month between them, or anyone buying a resale flat after owning a condo, simply cannot get the HDB loan. The bank loan has no HDB income ceiling; it cares about your credit profile and your debt servicing ratios instead.
Apply for the HFE letter early. It is valid for nine months, can take up to a month to process, and longer in the run-up to a BTO launch. You can also request an In-Principle Approval (IPA) from participating banks at the same time, which gives you an indicative bank loan amount so you can compare both options with real figures. The full eligibility maze is in our HDB flat eligibility (HFE) guide.
Your loan size is capped by debt servicing rules, and these apply differently depending on the loan and property. For any HDB flat or new EC, the Mortgage Servicing Ratio (MSR) limits your home loan repayment to 30% of gross monthly income. On top of that, a bank loan must also satisfy the Total Debt Servicing Ratio (TDSR), which caps all your monthly debt repayments, including car loans, credit card balances and personal loans, at 55% of gross monthly income.
Here is the part buyers miss: banks do not use the real low rate to test you. To work out how much you can borrow, banks apply a stress-test rate of 4% a year (or the actual rate if higher), so even a 1.3% loan is assessed as if you were paying 4%. HDB uses its own floor, the higher of 3.0% or the prevailing rate, to compute your eligible loan amount. This is deliberate, so that a buyer who borrows when rates are low is not crushed if rates rise. It also means your bank loan eligibility may be smaller than the cheap headline rate suggests.
Variable income, like commissions and bonuses, is only counted at 70% toward these ratios. If a big slice of your pay is variable, both your MSR and TDSR room shrink. Read how the rules interact in our TDSR glossary entry before you set a budget.
The HDB loan is the forgiving one. There is no lock-in period and no penalty for early repayment, so you can make lump-sum payments or clear the loan whenever you have spare cash. You can also refinance from HDB to a bank at any time. If bank rates are low, as they are in 2026, an HDB-loan holder can switch to a bank and bank the savings. That one-way door swings only outward, though.
Once you are on a bank loan, you cannot refinance back to HDB. Ever. So if you take a bank loan to grab today's sub-2% rate and SORA later spikes, your only escape is to refinance to another bank package, not back to the safety of HDB's 2.6%. That asymmetry is the single most important thing to understand about this decision. The HDB loan keeps the option open; the bank loan closes it.
Bank loans also carry costs the HDB loan does not. During the lock-in, repaying early usually triggers a penalty, commonly in the region of 0.75% to 1.5% of the amount prepaid (check the exact figure in your loan letter). Some packages add a cancellation fee if you back out before disbursement, or a clawback of legal subsidies if you refinance away within the first few years. HDB also imposes a late payment charge if you miss an instalment, set by HDB and reviewed every six months (5.6% a year for 1 April to 30 September 2026); banks vary but are often stricter and quicker to act. Factor these into the true cost, not just the advertised rate.
Both routes come with insurance you cannot skip, and the rules differ enough to affect your running costs. Any HDB flat with a mortgage, whether the loan is from HDB or a bank, must carry HDB Fire Insurance for the life of the loan. It covers the building structure and internal fixtures provided by HDB, not your furniture or renovations. Etiqa is the appointed insurer from 16 August 2024, premiums are small (single low-double-digit dollars for a five-year policy on a typical flat), and the cover renews every five years.
Mortgage life cover is where the two loans split. If you pay your HDB-flat instalments with CPF, the Home Protection Scheme (HPS) is compulsory; its premium is deducted yearly from your OA and it clears the outstanding loan if you die, become terminally ill, or are totally and permanently disabled. HPS settles directly with HDB or your bank up to the insured sum, so it works whether your loan is HDB or bank, as long as the flat is an HDB flat paid with CPF. Pay fully in cash and HPS is only encouraged, not required.
Banks add their own layer. Most lenders ask for fire insurance as a baseline, and some require a broader home or mortgage-reducing policy as a condition of the loan. If you take a bank loan and do not use CPF, you fall outside HPS and should arrange your own mortgage life cover. A standalone decreasing term assurance plan usually prices below the bank's bundled mortgage-reducing cover for the same protection, so compare before you sign whatever the bank puts in front of you.
Take a couple buying a $533,000 resale flat, borrowing 75% ($400,000) over 25 years. On the HDB loan at 2.6%, the monthly repayment is about $1,814, and total interest over 25 years is roughly $144,000 if the rate never changes (which it contractually will not). The down payment is 25% ($133,000), all of which can come from CPF OA if they have it, with no cash required.
On a bank loan fixed at 1.5% for the first three years, the monthly repayment drops to about $1,600, saving roughly $214 a month, or about $7,700 over the three-year fixed period versus the HDB loan. But they must front at least 5% of the price ($26,650) in cash, and after year three the rate reverts to floating. If it resets to, say, SORA plus 0.6% and SORA sits at 1.07%, the rate is about 1.67% and they still beat HDB. If SORA climbs back to 2.5%, the rate becomes 3.1% and the bank loan now costs more than the HDB loan would have.
The honest read: in 2026 the bank loan saves real money in the early years, but those savings are not guaranteed past the lock-in, and they cost you cash upfront plus the right to ever return to HDB. If the couple has the $26,650 cash and the discipline to refinance again when the fixed period ends, the bank loan is the cheaper play right now. If they are cash-tight or want to set the loan and forget it, the HDB loan's certainty is worth the slightly higher rate.
There is no single right answer, only the right answer for your cash position, your eligibility and your tolerance for rate risk.
Whichever you pick, request both an HFE letter and a bank IPA so you have two real loan amounts to compare, and remember the decision is reversible in only one direction. Start an HDB loan and you keep every option; start a bank loan and you have closed the door back to HDB. When the gap between bank rates and 2.6% is this wide, many eligible buyers take the HDB loan first precisely so they can refinance out on their own terms later.
On rate alone, a bank loan is cheaper in mid-2026. Bank fixed packages start around 1.3% to 1.7% because 3-month SORA has fallen to about 1.07%, versus the HDB loan's fixed 2.6%. But bank loans need at least 5% cash down, lock you in for one to three years, and can rise after the lock-in ends, while the HDB loan stays at 2.6% for life. The cheaper choice depends on your cash and how long you hold the rate.
Yes, anytime, with no penalty. The HDB loan has no lock-in, so you can refinance to a bank whenever bank rates look attractive, as many are doing in 2026. The reverse is not allowed: once you take a bank loan you can never refinance back to an HDB loan, so the HDB loan keeps your options open while a bank loan closes them.
For an HDB loan, none is required by rule. The full 25% down payment can be paid from your CPF Ordinary Account, cash, or a mix. For a bank loan, at least 5% of the purchase price must be in cash, with the remaining 20% from CPF or cash. On a $500,000 flat that is $25,000 in cash for a bank loan versus potentially zero cash for an HDB loan.
The average gross monthly household income ceiling is $14,000 for families, $7,000 for singles, and $21,000 for extended or multi-generation families. Earn above your ceiling and you cannot take an HDB loan; a bank loan becomes your only option. A bank loan has no HDB income ceiling but is subject to the bank's own credit checks and the TDSR and MSR limits.
2.6% a year, fixed, for 1 January to 31 March 2026. It is pegged at 0.1% above the CPF Ordinary Account rate, which is floored at 2.5%, so it has held at 2.6% since 1999. HDB reviews it every quarter in January, April, July and October, but it only moves if the CPF OA rate moves above its floor.
No, not since 20 August 2024. HDB cut its loan-to-value limit from 80% to 75% to match bank loans, so both now cap your loan at 75% of the price or valuation, whichever is lower, meaning a 25% down payment either way. The remaining difference is that the HDB loan's down payment can be fully CPF-funded while a bank loan needs at least 5% in cash.
It usually reverts to a higher floating rate, typically a benchmark like 3-month SORA plus a spread. With SORA around 1.07% in 2026, that revert rate may still beat the HDB 2.6%, but if SORA climbs back toward 3% as it did in 2025, your bank loan can become more expensive than the HDB loan. Most people refinance to a new package before or when the lock-in ends to avoid the revert rate.
COV is the gap between the price you agree for a resale flat and HDB's later valuation of it. Because both your loan and your CPF are capped at the valuation, any amount above it must be paid entirely in cash, on either an HDB loan or a bank loan. So a resale buyer who overpays the valuation faces that cash bill on top of the down payment and stamp duty. New flats bought from HDB have no COV because the price is the valuation.
Yes. Buyer's Stamp Duty applies to every property purchase regardless of loan type, tiered at 1% on the first $180,000, 2% on the next $180,000 and 3% on the next $640,000 of the price or valuation. On a $533,000 flat that is about $10,590. You can use CPF OA, but only by reimbursement: the duty must be paid in cash within 14 days of the document being signed, then claimed back from CPF, so you still need the cash upfront.
HDB Fire Insurance is compulsory for any HDB flat with an outstanding mortgage, whether the loan is from HDB or a bank, and must be renewed every five years. Etiqa is the appointed insurer since 16 August 2024 and premiums are small. The bigger difference is mortgage life cover: if CPF pays your HDB-flat instalments the Home Protection Scheme is compulsory, while bank-loan borrowers paying in cash, or buyers of private property, must arrange their own mortgage protection.
This is general financial information for Singapore, not personal financial advice. Figures change — verify current rates against the official sources above before acting. See our full disclaimer.