After checking your eligibility for the HDB concessionary loan, getting a Home Loan Eligibility (HLE) letter will be at the top of your list of things to do, regardless of whether you're getting a new BTO flat or resale HDB.

Of course, this doesn't apply if you're taking a bank loan. 

What's a HDB Loan Eligibility (HLE) letter

The main question you may have is probably "So… how much loan can I get?"

Well, one way to find out is by applying for a HDB Loan Eligibility (HLE) letter. A HLE letter is basically a confirmation from HDB telling you you qualify for a HDB concessionary housing loan, based on the information you submitted. 

It's similar to getting an In-Principle loan Approval (IPA) from a bank.

Having your HLE letter in hand helps to narrow down your budget range when you're going house hunting, so you won't experience any heartbreaks if you fall in love with homes that's way out of the realms of what you can realistically afford. 

Why do I need a HLE letter?

You need a valid HLE letter when you book a BTO flat after a successful ballot, get an Option to Purchase from the seller of a resale flat or apply to take over the ownership of an HDB flat. 

If you apply for a BTO without a HLE letter, you are immediately disqualified from applying for a HDB housing loan. 

Your HLE letter will tell you:

• The amount of HDB housing loan you're eligible for
• Your repayment period
• The interest rate of the loan

If you're buying your second flat: The amount of proceeds from the sale of the previous flat that will go towards your next home purchase so you can minimise the required loan amount

How long is the HLE letter valid for? 

The letter will be valid for six months from the date of issue. Re-assessment and re-submission is needed if:

There are significant changes in your incomes and financial positions, such as an unexpected loss of job or other reasons 

There are changes to the applicant(s) and occupier(s)

If you're purchasing a BTO flat, HDB will review your eligibility again when the completion date approaches to confirm your ability to service your housing loan. 

Keep track of when your HLE expires - if you need to reapply for a new letter, you can do so a week before your current letter expires. 

How do I apply for a HLE letter? 

First of all, you and your spouse will need a valid Singpass, because every single step will require you to login with it. You'll also have to be employed during the month of application and stay employed until your housing loan is disbursed. 

Next, you need to prepare your income documents, which should be saved in either PDF or JPG format. 

HDB prioritises the employment status of applicants as a key consideration when granting HLE letters, with the simple yet obvious reason that you can't pay for your home if you lack a consistent source of income.

Do note that HDB does not consider these for the credit assessment:

• Rental income
• Dividend income/ interest from deposit accounts
• Alimony/ maintenance fee
• Bonuses
• Director's fee
• Income from ad hoc overtime work
• National Service allowance
• Claims/ reimbursement/ expenses
• Scholarship overseas allowance
• Occupier's income
• Overseas cost of living allowance
• Pension

Here's how HDB takes income into consideration before specifying a maximum loan amount on your HLE letter. For a regular employee, the two most important documents you are required to show HDB are your latest three months' payslips and the last 15 months of CPF contributions history.

For self-employed, part-time and odd job workers, documents such as your Notice of Assessment from IRAS needs to be furnished to HDB.

Required documents for HLE letter

HDB requires different sets of documents for different people. In a nutshell, the less stable your income, the more proof is required to be submitted to HDB.

Employees with monthly CPF contribution

• Latest three months' payslips
• Latest 15 month' CPF contribution history (example)
• If income is variable and/or includes allowances: six months' payslips

Employees without monthly CPF contribution

• Latest six months' payslips
• Latest six months' bank statements
• Credit Bureau report (example)

Self-employed persons

• Latest Notice of Assessment from IRAS or Certified Annual Statement of Accounts from an audit firm
• Credit Bureau report
• Latest six months bank statements

Commission-based and part-time workers

• Latest six months commission statements/ payslips or a recent letter from the employer certifying job designation, commencement date, and commissions/ salaries for six months before the month of application
• Latest 15 month's CPF contribution history
• Credit Bureau report
• Latest six months bank statements

Odd job workers

• Latest Notice of Assessment from the IRAS or a recent letter from the employer certifying your job designation, commencement date, and your commission/salaries for six months before the month of application
• Latest 15 month's CPF contribution history
• Credit Bureau report
• Latest six months bank statements

Unemployed persons 

If you're a full-time student aged 18 to 62, you'll need to submit a valid Student Pass.

On top of that, if you've been unemployed for less than three months, you'll need to submit the following documents:

• Income proof for the preceding month(s) from the previous employer stating your gross monthly income and last day of service
• Latest 15 months CPF contribution history

With these documents organised and ready, go ahead and upload them to the HDB portal for HDB's perusal. 

You can also save the application draft for 30 days, and retrieve it here to complete your application.

After they've determined you to be a fully functioning adult capable of servicing your mortgage, you'll be notified via SMS within two weeks to review your HLE letter details by logging in to My HDBPage. 

If you're impatient and want to check on your application progress every couple of hours (we won't judge), you can login to My HDBPage under My Flat > Application Status > HLE. 

Didn't get the amount you wanted?

In the event that you don't get the loan amount you're hoping for, you can reverse engineer the process to get a higher amount when you reapply for the HLE letter.

To do so, start by looking at what factored into HDB's decision and improve on these factors. If you are a commission-based worker, for instance, you can try to take on more work to get a higher average monthly pay for six consecutive months and apply again.

If you have a huge outstanding debt (eg. a car loan), you might want to repay that first to increase your credit standing.

Again, to give you an idea of the maximum loan amount you'd get before you start your home search, HDB has a useful calculator to estimate how much loan your HLE letter will grant you.

Note: If you are buying a BTO flat from HDB, then your financial position will be reviewed twice; once before you decide to purchase the flat, and another time nearer to the completion date of the flat. Make sure your financial ability to service the housing loan has not changed by this point.

While quite rare, it is possible that after you have gone through the BTO process, and put down your downpayment, you are unable to get an HDB loan. To avoid this disappointment so close to the finish line, we advise you to remain fiscally prudent and prioritise financial stability.

The Credit Bureau report

As noted above, certain buyers will need to get a credit report to apply for the HDB concessionary loan. Credit Bureau Singapore (CBS) pools all your credit payment history from different banks and companies to give you a credit score.

The higher your credit score, the easier it is to get a loan and the higher the loan amount you can get. Before applying for the HLE letter, you can request for your credit score on the CBS website.

If you do not have an AA score (the highest), take some steps to improve it first, such as by paying off outstanding debts first, before you apply for the HLE letter.

Applying for a second HDB loan?

If you've taken a HDB loan before and you're buying another HDB flat after selling your existing one, you'll have to submit two main documents. 

Completion statements showing the breakdown of cash proceeds and CPF refund for the disposal of the last owned HDB flat (if you do not own a flat currently (example).

Divorce documents showing the division of the matrimonial HDB flat (if the immediate past HDB flat was disposed of/ with/ by an ex-spouse)

The above applies to both applicants and essential occupiers of the flat application.

Good luck with your HDB housing loan application, and may the odds be ever in your favour.

This article was first published in 99.co.