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When To Pay HDB Downpayment and How Much? Resale Vs BTO

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Buying a home in Singapore, particularly an HDB (Housing Development Board) flat, can be a complex endeavour. In 2024, HDB flats in Singapore continues to be a popular choice for homebuyers, offering both Build-To-Order (BTO) and resale flats. Understanding the intricacies of downpayments for these options is crucial.

When buying an HDB flat, you have the option to secure a home loan either through HDB or a bank. However, irrespective of the loan source, you must account for the initial HDB downpayment, which is a separate cost from the total loan amount.

Many first-time homeowners prefer an HDB loan, primarily because it typically doesn’t require a cash downpayment, making it more accessible for those with limited immediate funds. If you have substantial savings, you may consider taking up a bank loan to benefit from the anticipated interest rate cuts in 2024.

Let’s start by defining what a downpayment for an HDB flat entails. This article will delve into the specifics of how much you should be saving for the downpayment based on the HDB flat type you’re considering. Additionally, we’ll cover the timing of the downpayment, highlighting when it needs to be made during the process of acquiring a new home.

What is HDB downpayment?

As the phrase suggests, the HDB downpayment is the initial sum of money you need to pay when you purchase a new HDB flat. It is the outstanding amount after deducting the LTV limit, for which you can also use your CPF OA savings to pay partly or fully.

While HDB resale flats tend to be bigger and more convenient, they are also more expensive than BTO flats of the same size and in the same area. HDB BTO flats are much cheaper than resale flats as they aren’t sold by homeowners looking for capital gains. This means you typically have to cough up a higher downpayment for resale flats.

Clearly, the downpayment of your HDB property is often the most important thing a buyer should consider when deciding on which property to buy. Fortunately, the HDB’s Staggered Downpayment Scheme comes as a saving grace for homebuyers. We will talk more about it in detail in a section below.

Before that, you must decide whether you should buy a BTO or an HDB resale flat in Singapore based on your financial situation and needs.

Should I buy a BTO or resale HDB flat?

Both BTO and resale HDBs have their pros and cons. Here is a comparison table to help you choose what suits your requirements.

BTO HDB Flat Resale HDB Flat
More affordable option; highly subsidisedPriceMore expensive option than BTOs
Relatively smallerFlat SizeBigger & more convenient
Pre-determined by HDB; fewer optionsLocationWider selection of locations
Longer wait time – 3 to 5 yearsWaiting periodShorter wait time – in a matter of months
Max household income limitations for singles, couples & extended familiesIncome ceilingNo income ceiling limit
One of the applicants must be SingaporeanEligibility criteriaPRs are allowed to buy HDB resale flats
Generally less; can opt into HDB’s OCS to reduce costsRenovations costRelatively high; up to 40% more than BTO flat
Fresh 99-year leaseLease tenureDeclining lease
Up to $80,000 for first-timer familiesHousing grantsUp to $190,000 for first-timer families
Better resale value after Minimum Occupancy PeriodFuture market valueLess profitable due to more competition

How much is the HDB downpayment?

The ultimate cost of your HDB downpayment will possibly differ depending on two main factors:

  • Whether you are applying for an HDB concessionary loan or a HDB bank loan?
  • What HDB flat type are you purchasing – BTO or resale?

Here is a table to show how much downpayment will you pay for your HDB flat:

 HDB loanBank loan
HDB BTO20% CPF or cash5% cash + 20% CPF
HDB resale20% CPF or cash5% cash + 20% CPF
Executive Condo (EC)Not applicable5% cash + 20% CPF

Please note that we will only elaborate on the downpayment details of the HDB BTO flat vs HDB Resale flat.

While HDB loans offer a viable financing option for Singaporeans purchasing either BTO or resale flats, they are not applicable for the purchase of ECs. For ECs, buyers must seek financing through bank loans instead.

It’s important to remember that the downpayment is merely the initial step in the home-buying process. Additional costs, including stamp duty and legal fees, are also part of the financial commitments when purchasing a home.

Since 9 May 2023, you must secure an HDB Flat Eligibility (HFE) letter, which has replaced the previous HDB Loan Eligibility (HLE) letter, before applying for an HDB BTO or HDB resale loan.

An HLE letter is an official document from the HDB of Singapore. It confirms your eligibility for an HDB concessionary housing loan and details the maximum loan amount, repayment period, and other terms. Prospective buyers of HDB flats must obtain this letter before applying for a loan, ensuring they meet specific criteria such as income limits and citizenship status. The HLE letter is valid for six months from the date of issue.

How much is the downpayment for HDB BTO flat?

Depending on the loan type you take, your downpayment may largely vary.

  • Downpayment when buying BTO with an HDB loan

Following the introduction of new HDB cooling measures on September 29, 2022, there has been a significant change in the Loan-To-Value (LTV) Ratio. For all flat applications submitted on or after September 30, 2022, the LTV Ratio has been adjusted from the previous 85% down to 80%. This revision is an essential aspect of the new policy framework impacting potential homebuyers.

This means homebuyers taking out an HDB loan for BTO flat will have to pay a downpayment of 20% (instead of the previous 15%) of the purchase price. You can potentially pay the whole thing with your CPF OA funds if you have enough money. Or otherwise, the 20% downpayment can be paid in cash, using CPF OA balance, or any combination of the two.

For example, suppose you have decided to buy a 3-room BTO flat in a mature estate for $400,000. Since the LTV limit of an HDB flat is 80% (=$320,000), the HDB downpayment that you will need to pay is $80,000 (20%). You can pay this amount in cash, using your CPF OA balance, or a combination of both.

  • Downpayment when buying BTO with a bank loan

When purchasing a BTO flat with a bank loan, the amount you can borrow is contingent upon your bank’s loan ceiling, which typically ranges from 55% to 75% of the BTO flat’s purchase price. This means your downpayment will either be 45% (for loans up to 55%) or 25% (for loans up to 75%), based on the percentage of the purchase price not covered by the bank loan.

  1. For LTV up to 75%

If you took a 75% loan from a bank, the downpayment is going to be 25%. As discussed in the example above, for an HDB BTO flat worth $400,000, the downpayment will be $100,000.

Out of $100,000, 5% must be paid in cash (=$5,000), with the remaining 20% to be paid in cash or using your CPF OA savings or a mix of both.

  • For LTV up to 55%

Let’s say you have taken a bank loan with a loan ceiling of 55%. For the downpayment of 45%, you will need to pay 10% in cash, with the other 35% to be paid using your CPF OA savings, cash, or a combination of the two.

This means you will pay $40,000 (10% of $400,000) in cash for the downpayment, while the remaining $140,000 can be paid using cash or your CPF OA savings.

When to pay the downpayment for HDB BTO?

If you take up an HDB housing loan, you will need to shell out the downpayment for BTO during the signing of the lease agreement, which usually happens four to six months after you have booked the flat.

Please note that HDB offers a Staggered Downpayment Scheme if you are purchasing a BTO flat. If eligible, you can opt to pay the downpayment in two tranches. This will be discussed in detail in a section below.

On the other hand, if you choose to finance your BTO with a bank loan, you must check with your lender bank on the payment schedule.

How much is the downpayment for HDB resale?

One advantage of buying a resale flat is that since you are taking over the previous owner’s property, you don’t have to wait to collect your keys once the transaction is completed and can move in sooner. However, you might have to deal with the cost of renovating the flat, and it may have fewer years left on the lease when you buy it.

  • Downpayment when buying a resale flat with an HDB loan

The details of buying a resale flat with an HDB housing loan are similar to those of buying a BTO flat.

If you are taking a housing loan from HDB, the downpayment you need to pay remains at 20% of the resale flat’s purchase price. Similar to when buying a BTO flat with HDB loan, it can be paid in cash, using CPF OA balance, or any combination of the two.

Suppose you are purchasing a 4-room resale flat in a mature estate for approximately $600,000. Under the revised LTV limit of 80% (which amounts to $480,000), you are required to pay 20% ($120,000) as the initial downpayment. This entire downpayment amount can be covered using your CPF savings, if you have enough OA funds.

Please note that you cannot purchase an EC with an HDB loan. So, you’ll have to take up a bank loan.

  • Downpayment when buying a resale flat with a bank loan

When opting for a bank loan, the downpayment will be subject to the loan ceiling of your bank loan. You will need to put in a downpayment between 25% and 45% of the resale flat’s purchase price. Fortunately, you can pay most of it with your CPF OA balance.

Take a look at the details below:

  1. For LTV up to 75%

When you are allowed an LTV limit of 75%, your property downpayment will be 25%. Out of the 25%, a minimum of 5% must be paid in cash while the remaining 20% can be paid out in cash, using CPF OA or a combination of both.

For example, as discussed above, the downpayment for a $600,000 4-room resale flat will be $150,000 (25% of $600,000).

At least $30,000 (5% of $600,000) needs to be paid in cash while the outstanding $120,000 (20% of $600,000) can be paid out through your CPF OA savings or whatever combination of cash and CPF monies suits you.

  • For LTV up to 55%

If the maximum loan you can borrow is 55% of the purchase price, your initial downpayment will be 45%. Out of which, you will have to pay 10% in cash, with the remaining 35% to be paid using your CPF savings, cash or a mix of both.

Therefore, for the 4-room resale flat worth $600,000, you will pay $60,000 (10% of $600,000) in cash, with the remaining $210,000 (35%) to be paid with cash or CPF OA savings.

Unlike unfinished BTO flats, you will not be eligible for the staggered downpayment scheme when buying an HDB resale flat. This means that you would have to fork out the cash or your CPF funds when signing the lease agreement.

When to pay the downpayment for an HDB resale flat?

If you take an HDB loan, you can pay the downpayment using CPF. Upon confirmation of your financial plan through the HDB Resale Portal, an online transfer of your CPF funds will be initiated.

If you want to pay through cash, you simply need to submit the cashier’s order at the resale completion appointment.

When taking a bank loan, you should check with your bank on the payment schedule.

For this reason, your HDB downpayment will differ considerably based on whether you select an HDB or bank loan. Therefore, it is crucial to make an informed decision between an HDB concessionary loan or a bank loan for HDB flats.

What determines the loan ceiling of a bank loan?

If you meet the requirements of the Mortgage Servicing Ratio (MSR) and the Total Debt Servicing Ratio (TDSR), the maximum amount you can borrow for your bank loan is determined by two key factors: the duration of your loan, and the number of housing loans you currently have when applying.

Here’s a brief summary table to illustrate this:

Loan TenureNo Outstanding Housing LoanOne Outstanding Housing LoanTwo or More Outstanding Housing Loan
25 years or less75%45%35%
More than 25 years55%25%15%

Should I get an HDB loan or a bank loan?

HDB loan Bank loan
20% (cash and/or CPF)Downpayment25% (min. 5% cash; remaining 20% cash and/or CPF)
2.6% p.a.Interest rateCurrently higher than 2.6% p.a. (fluctuates with market conditions)
Little to no fluctuationInterest rate fluctuationYes, after every few years
HigherMonthly instalmentsDepends on the interest rate environment
Practically noneEffort requiredNeeds to be refinanced every 2 to 3 years
More lenientLeniency levelLess lenient

Depending on your financial situation and future needs, you can opt for an HDB concessionary loan or a bank housing loan based on the comparison table above. You can also take advantage of HDB grants and different HDB downpayment schemes to ease the financial burden.

What is HDB’s Staggered Downpayment Scheme?

When purchasing a new HDB flat, you are eligible for the Staggered Downpayment Scheme. Under this scheme, you don’t need to pay all the downpayment upfront. You can opt to pay the downpayment in two parts, which helps you spread out the financial burden of owning a house. This helps you get more time to accumulate money for your second instalment. Note that it is only applicable for BTO flats and not when buying a resale flat.

According to HDB, under the Staggered Downpayment scheme, you can spread out the downpayment in two instalments:

  • First instalment: when you sign the Agreement for Lease with HDB, which is usually within four to six months of booking a flat;
  • Second instalment: will be paid during key collection.

The amount of downpayment you need to pay under the staggered scheme depends on whether you take an HDB or bank loan. Let’s take a look at the table* below.

HDB loan Bank Loan
5% using CPF OA savings or cashInstalment 1 (Downpayment at the signing of the agreement for leasea) with a 75% loan ceiling:   5% in cash + 5% using CPF OA savings/ cash   b) with a 55% loan ceiling:   10% in cash
10% using CPF OA savings or cashInstalment 2 (Remaining payment during the collection of keys)a) with a 75% loan ceiling:   15% using CPF OA savings of cash   b) with a 55% loan ceiling:   35% using CPF OA savings of cash

* If you have booked a new flat on or after 6 July 2018

So, if you are applying for a 3-room BTO flat with a HDB loan with a purchase price between $300,000 to $400,000. Then you will have to pay the first part of the downpayment of $12,500 – $20,000 (5% of property value) at the time of lease signing and the second part of the downpayment of $45,000 – S$60,000 at the time of key collection.

Who is eligible for the staggered downpayment scheme?

Not every homebuyer is eligible for the staggered downpayment scheme. Let’s take a look at the eligibility criteria for the scheme.

You are eligible for the staggered downpayment scheme if:

  • At least one of you (in a couple) is a first-time applicant;
  • Applying for a 2-, 3-, 4-, or 5-room BTO flat;
  • The younger applicant of the two is yet to reach their 30th birthday.

The staggered downpayment scheme is also available to homeowners right-sizing to a 2-room Flexi or a 3-room flat in non-mature estates, regardless of their age.

What is HDB’s Deferred Downpayment Scheme?

A lot of Singaporeans are seen right-sizing their homes these days. Doing so allows them to unlock their home value for their retirement needs. To help elderly citizens smoothen the right-sizing process, especially if their funds are tied to their existing flat, HDB introduced the Deferred Down Payment scheme. This way, elderly flat owners need not worry about cash flow problems.

Essentially, this scheme allows homebuyers to defer their downpayment until key collection if they are right-sizing. For example, if a retiree is downsizing to a 2-room Flexi or 3-room BTO from HDB, they can defer their downpayment till the time of key collection. In other words, at the time of signing the lease agreement, you will only have to pay the stamp duty and legal fees.

However, if you cancel the flat application due to any reason, you will be responsible to pay the 5% (of the flat price) forfeiture fee.

If you are aged 55 years old or more, you may be eligible for the deferred downpayment scheme offered by HDB. You don’t have to apply for it seperately.

Who is eligible for a deferred downpayment scheme?

In addition to the age criterion, here are some eligibility conditions for the scheme:

  • have booked a 2-room Flexi or 3-room uncompleted flat;
  • have not sold or completed the sale of their existing flat at the point of new flat application.

As long as you fulfil these conditions, you will automatically be allowed to defer your downpayment until key collection.

Besides these HDB downpayment schemes, you can also apply for CPF housing grants to help reduce your expenses for your HDB flat purchase.

How many CPF housing grants can you get for your HDB flat?

Depending on whether you buy a BTO flat or a resale flat, there are several housing grants first-time applicants can qualify for. Also known as HDB housing grants, these are given to lower- and middle-class individuals so they can also afford to buy an HDB flat in Singapore.

The grants are accredited to the individual’s CPF account (not disbursed in cash or bank account) after they have booked an HDB BTO or resale flat so that you can only use it for purchasing the house.

Assuming you are a first-time HDB buyer applying as a couple or family and fulfil all income ceiling requirements, the maximum grants you can get for HDB flats are:

HDB typeCPF housing grantIncome ceilingHDB grant amount
BTO flatEnhanced CPF Housing Grant (EHG)Monthly household income up to $9,000$5,000 to $80,000 depending on the income (inversely proportional)
Resale flatEnhanced CPF Housing Grant (EHG)Monthly household income up to $9,000$5,000 to $80,000 depending on the income (inversely proportional)
Resale flatFamily GrantHousehold monthly income not more than $14,000
(or S$21,000 for extended family applicants)
SC/SC household buying 2- to 4-room flat: $80,000;
SC/SC household buying 5-room or bigger flat: $50,000;
SC/SPR household buying 2- to 4-room flat: $70,000;
SC/SPR buying 5-room or bigger flat: $40,000
Resale flatProximity Housing Grant (PHG)No income ceiling$30,000 for families living with parents/child   $20,000 for families living within 4km of parents/child   $15,000 for singles living with parents/child   $10,000 for singles living within 4km of parents/child

However, please note that you must return all HDB grants (CPF grants) to your CPF OA with accrued interest.

A few important points to remember:

  • EHG grant is tiered according to the household income, meaning lower-income households will receive a higher grant.
  • From 9 May 2023 onwards, to be eligible for EHG, your and/or your co-applicants’ household income will be assessed for a period of at least 12 months.
  • The HDB grants for couples are evenly allocated among the applicants and/or core occupiers, and the funds are directly credited to their respective CPF OA.

To sum it up, the maximum grant one can get for BTO vs Resale flats:

HDB BTO grant: up to $80,000 (EHG)

HDB resale grant: up to $190,000 (EHG + Family Grant + PHG)

Final Thoughts

While there are plenty of choices that HDB can offer, be sure to assess all the options you qualify for before making a decision. Whether you choose an HDB BTO, resale flat or EC, it should be within your financial means.

Check if you have enough financial savings to make your initial downpayment before submitting the loan application and whether you meet the TDSR, LTV and MSR requirements. Remember that while it is important to make your savings grow with better-return investments or find ways to make some passive income, you must not put your HDB downpayment money in high-risk investments.

If you need any help regarding HDB or private property home loans in Singapore, don’t hesitate to connect with one of our friendly, qualified mortgage consultants at DollarBack Mortgage.

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