The two ways most Singapore homebuyers finance an HDB flat are the HDB concessionary loan (direct from HDB at 2.6%) and a bank loan (from any commercial lender at market rates). Both now cap your loan at 75% of price or valuation (the HDB limit was cut from 80% to 75% on 20 August 2024), so the real differences come down to your cash buffer, citizenship, income, property type, and how much rate certainty you want. Bank rates can dip below HDB's 2.6% in a low-rate cycle, but you trade that for lock-in periods, mandatory cash downpayment, and the need to refinance every few years.
| HDB Loan | Bank Loan | |
|---|---|---|
| Property eligible | HDB flats only | HDB, EC, private residential |
| Citizenship | At least one SC applicant | Open to SC, PR, foreigners |
| Interest rate | 2.6% fixed (CPF OA rate + 0.1%) | Market-linked fixed or SORA-pegged — can sit above or below 2.6% |
| Max tenure | 25 years | 30 years (private), 25 (HDB) |
| Max LTV | 75% (cut from 80% on 20 Aug 2024) | 75% |
| Min cash downpayment | None — 25% fully CPF-fundable | 5% cash + 20% cash or CPF |
| Income ceiling | S$14,000 (family), S$7,000 (singles) | None |
| Affordability check | MSR 30% only (no TDSR) | MSR 30% (HDB/EC) + TDSR 55% |
| Lock-in period | None — repay early penalty-free | Typically 1 – 3 years (~1.5% early-repayment penalty) |
| CPF OA you can keep | Up to S$20,000 retained | Any amount — no minimum drawdown |
| If you default | HDB offers assistance first; repossession only as last resort | Bank can force a mortgagee sale, often below market |
| Number of loans | 2 in lifetime | Unlimited (LTV drops with each) |
| Refinance to other | Yes (HDB → bank loan) | No (once on bank loan, can't go back) |
Start with the HDB loan if you qualify — its rate stability, zero-cash downpayment, no lock-in, and softer treatment if you ever fall behind are hard to beat for a first home. Take a bank loan from the start if you want to chase a sub-2.6% rate and are comfortable refinancing every few years, or if you've built enough cash reserves to want a longer tenure. Because you can refinance from HDB to a bank but never the reverse, starting on the HDB loan keeps both doors open. For private property you have no choice — bank loan it is.
Yes, you can refinance to a bank loan at any time after taking an HDB loan. The reverse is not allowed — once you've taken a bank loan for an HDB flat, you can't switch back to the HDB concessionary loan.
S$14,000 average gross monthly household income for families (S$21,000 for extended families), or S$7,000 for singles buying a 2-room flexi. Households above the ceiling must take a bank loan.
HDB pegs the concessionary rate to the CPF Ordinary Account interest rate plus 0.1%. The CPF OA rate has held at 2.5% since 1999, so the HDB rate has stayed at 2.6% throughout.
Not any more. From 20 August 2024 HDB cut its Loan-to-Value limit from 80% to 75%, matching bank loans. So both routes now finance up to 75% of the price or valuation (whichever is lower), and you fund the remaining 25% as a downpayment. The difference is how you pay that 25%: with an HDB loan it can be entirely CPF Ordinary Account savings, while a bank loan requires at least 5% in cash with the other 20% in cash or CPF.
Yes. In a low-rate cycle, bank fixed and SORA-pegged packages can fall below 2.6%, which is the main reason buyers choose a bank loan. The trade-off is that bank rates aren't permanent — fixed packages reset after one to three years and floating rates move with SORA — so you usually have to refinance every two to three years to keep beating 2.6%, whereas the HDB rate just stays put.
No. An HDB concessionary loan has no lock-in period, so you can make partial or full early repayments at any time without penalty. Bank loans usually carry a lock-in of one to three years, and repaying or refinancing during that window typically incurs a penalty of around 1.5% of the outstanding amount.
No. HDB concessionary loans are assessed only against the Mortgage Servicing Ratio (MSR), which caps your monthly housing repayment at 30% of gross monthly income. They are not subject to the 55% Total Debt Servicing Ratio (TDSR) that applies to all bank property loans. A bank loan on an HDB flat must pass both the 30% MSR and the 55% TDSR, so existing car loans, credit-card balances, and other debts can shrink how much a bank will lend you.
With an HDB loan, none — the full 25% downpayment can come from your CPF Ordinary Account, cash, or any mix. With a bank loan, at least 5% of the price must be paid in cash, and the remaining 20% can be cash or CPF OA. That cash requirement is often the deciding factor for buyers who are CPF-rich but cash-tight.
On an HDB loan you generally have to use your available CPF Ordinary Account savings towards the flat, but you can choose to set aside up to S$20,000 in your OA as a buffer. On a bank loan there is no minimum CPF drawdown — you can keep any amount in your OA, which is useful if you'd rather leave that money to earn the 2.5% OA interest.
The two routes handle hardship very differently. If you fall behind on an HDB loan, HDB typically steps in with Financial Assistance Measures — such as restructuring the loan, extending the tenure, or a temporary deferment — and only pursues repossession as a last resort. With a bank loan, a sustained default can lead to a mortgagee (forced) sale, where the flat may be sold below open-market value to recover the debt, on top of penalty interest.
Yes if you plan to use an HDB loan. The HDB Flat Eligibility (HFE) letter — which includes your loan eligibility, formerly the standalone HLE letter — tells you how much HDB will lend and is valid for six months. For a bank loan you'd instead get an Approval-in-Principle (IPA) from the bank. Either way, securing the in-principle figure before you commit to a flat stops you from over-committing.