HDB downpayment guide: How much do you need for BTO, resale & EC?
PHOTO: The Straits Times
That’s largely because of recent delays for BTO flats, but some buyers also associate BTOs with quality issues like poor soundproofing as a result of using non-concrete drywall.
That being said, the first step to homeowning is coughing up the cash for the downpayment.
As you know, BTO, resale and ECs are priced quite differently and are subject to different rules. So find out how much you need to save for the downpayment for each HDB type here!
TL;DR: HDB downpayment for BTO, resale & EC
We’ve cut to the chase on how much the downpayment will cost on your first HDB flat:
| HDB loan | Bank loan | |
| HDB BTO | Fifteen per cent CPF or cash | Five per cent cash + 20 per cent CPF |
| HDB resale | Fifteen per cent CPF or cash | Five per cent cash + 20 per cent CPF |
| Executive condo | Not available | Five per cent cash + 20 per cent CPF |
All you need to do is to multiply the percentage by the purchase price. For example, for a $400,000 BTO flat:
- If you take an HDB loan, your downpayment would be $60,000 (15 per cent) in CPF
- If you opt for bank loan, your downpayment would be $20,000 (five per cent) in cash + $100,000 (20 per cent) in CPF
Why are there two different HDB downpayments?
Your downpayment largely depends on which type of loan you take: HDB loan or bank loan.
Most Singaporeans go for the HDB loan because you can borrow 85 per cent of the flat price, so your downpayment is only 15 per cent. But the interest rate is higher, at 2.6 per cent.
Bank loans currently offer much lower interest rates of about 1.2 per cent to 1.5 per cent. But the downpayment is much higher: 25 per cent, of which at least five per cent must be paid in cash.
So the key things you need to know about your HDB downpayment are:
- Loan-to-Value (LTV) Limit: The amount that you can borrow from HDB (85per cent) or the bank (75 per cent)
- Downpayment: The outstanding amount after deducting the borrowing limit, which you can use your CPF to pay partly or fully
- Minimum cash downpayment: Only applies if you take up a bank loan
We’ll also cover Stamp Duty (BSD and/or ABSD). This is a fee on top of the purchase price, which you must pay in cash first then request a reimbursement from your CPF (so either way you’re still paying for it).
HDB downpayment for BTO flat
Imagine this: You’re a “newly” wedded couple eager to move out of your respective parents’ places despite tying the knot two years ago.
Both of you have finally decided on this beautiful three-room BTO flat in Tampines, a mature estate, with easy access to amenities and attractions. It costs $400,000 — can you afford it?
Here’s the downpayment breakdown for your HDB BTO flat:
| HDB loan | Bank loan | |
| Loan-to-value limit | 85 per cent ($360,000) | 75 per cent ($300,000) |
| Downpayment (CPF) | 15 per cent ($60,000) | 20 per cent ($100,000) |
| Downpayment (cash) | No requirement | Five per cent ($20,000) |
| Stamp duty |
$6,600 |
$6,600 |
You’ll be happy to know that HDB offers a staggered downpayment scheme. The conditions are:
- You have booked five-room or smaller flat in any of HDB’s BTO launches
- You’re a married couple or applying under the Fiancé/Fiancée Scheme
- At least one of you is a first-time applicant
- You applied for a BTO before the younger applicant’s 30th birthday
Under the HDB staggered downpayment scheme, your downpayment will be split into two parts:
| When to pay |
|
Bank Loan (75 per cent LTV ratio) | |
| When signing of lease for new BTO flat | 7.5 per cent ($30,000, CPF or cash) | Five per cent ($20,000, cash) + Five per cent ($20,000, CPF or cash) | |
| During key collection | 7.5 per cent ($30,000, CPF or cash) | 15 per cent ($60,000, CPF or cash) |
HDB downpayment for resale flats
What if you don’t want to wait a whole lifetime for a new BTO flat? Much of the conditions to buy a BTO flat applies to a resale flat as well.
For simplicity’s sake, let’s imagine buying a four-room resale flat in a mature estate like Bedok. At $600,000, it’s significantly more expensive than the BTO option, but hey, at least you can move in within the year.
| HDB loan | Bank loan | |
| Loan-to-value limit | 85 per cent ($510,000) | 75 per cent ($450,000) |
| Downpayment (CPF) | 15 per cent ($90,000) | 20 per cent ($120,000) |
| Downpayment (cash) | No requirement | Five per cent ($30,000) |
| Stamp duty (pay in cash, but reimbursable from CPF) |
$12,600 |
$12,600 |
However, unlike uncompleted BTO flats, you will not be eligible for HDB’s staggered downpayment scheme. This means that you would have to cough up the cash or funds from your CPF when you sign the lease.
HDB downpayment for EC
Executive condominiums are technically HDB flats, but they’re a whole different animal from BTO and resale flats.
Unlike BTOs and resale flats, you cannot apply for an HDB loan to purchase your EC. You’ll have to go to the bank for that, and your downpayment is much higher. The process largely follows that of the downpayment for a condo.
Here is the breakdown for a $1 million three-room EC in a non-central neighbourhood:
| Bank loan | ||
| Loan-to-value limit | 75 per cent ($750,000) | |
| Downpayment (CPF) | 20 per cent ($200,000) | |
| Downpayment (cash) | Five per cent ($50,000) | |
|
$24,600 |
The challenge arises from accruing $200,000 in your CPF and $50,000 in cash. Stamp duty is quite steep too, at $24,600 — the fact that it’s reimbursable from your CPF OA just means that you need that amount to begin with.
In total, you and your spouse need at least $74,600 in your bank accounts.
Things to note for Permanent Residents (PRs)
The above calculations were done with naturalised Singaporeans in mind. Singaporeans only need to pay buyer’s stamp duty (BSD) on their first property, so stamp duty does not affect the downpayment.
PR couples, however, need to pay additional buyer’s stamp duty (ABSD). This is usually five per cent of the property’s price.
If you are a PR and your spouse is a Singaporean, you do not have to pay for ABSD when making a HDB downpayment.
Should I get an HDB loan or bank loan?
| HDB loan | Bank loan | |
| Downpayment | 15 per cent (can be CPF) | 25 per cent (min five per cent in cash) |
| Interest rate | 2.6 per cent | Currently about 1.2 per cent to 1.5 per cent |
| Does interest fluctuate? | No | Yes, every few years |
| Monthly instalments | Higher | Lower (as long as interest rates stay low) |
| Effort needed | Practically none | May need to refinance every two to three years |
| How forgiving is it? | More lenient | Less lenient |
As you can see, your HDB downpayment will vary significantly depending on whether you opt for an HDB or bank loan.
Cash-strapped Singaporeans would go for the HDB loan because of the much lower downpayment (15 per cent). Even though the interest rate is higher compared to bank loans, the rate is fixed for a tenure up to 25 years, meaning there is little to no fluctuation in your monthly instalments.
HDB is also more lenient in that you can choose to repay your loan early or even switch to another provider without penalty. If you can afford the downpayment, bank loans currently offer much lower interest rates than HDB.
However these interest rates are only locked in for two to three years, which means that you may need to refinance every few years to keep on top of the best interest rates. The MoneySmart team can help with this troublesome bit of legwork.
Do I have enough money for a HDB downpayment?
That’s a question that only you can answer, but fortunately for you, we’ve got many tools for you to get started for your first HDB downpayment. Start out with our home loan tool, as well as our many guides for you to purchase your first HDB BTO flat, resale flat and EC.
Whilst you’re saving up for the HDB downpayment, why not make your savings grow with the best fixed deposit accounts for something low-risk, or choose one of the many listed online brokerages for something with better returns, or do a bit of both!
Failing that, find out some ways to make some passive income or hustle up a high-paying side gig for something a little more immediate.
As lucrative as it seems, you probably don’t want to put your HDB downpayment money in cryptocurrency. Crypto is highly volatile and can let you gain some extra cash fast… but you can also lose your original capital at equally short notice, leaving you in the lurch when you need to make that downpayment.
READ MORE: How much do you really need to buy your first condominium in Singapore?