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

When purchasing an HDB flat, you can choose to take a loan directly from HDB or a bank of your choice. But remember, in addition to the total loan amount, you still have to pay for the initial HDB downpayment.

First-time homeowners usually go for an HDB loan as it requires no cash downpayment. If you have enough savings, you can opt for a bank loan to enjoy a lower interest rate. If you don’t have enough savings as of now, it is likely that you will need to find a different, lower-priced property.

We will start with what an HDB downpayment means. This article will also talk about how much you need to save to pay off the downpayment of your chosen HDB type and when should you make the downpayment when purchasing 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.

You have to pay with the downpayment immediately after signing the Agreement for Lease to your home, irrespective of whether you are purchasing an HDB BTO flat or a resale flat.

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. This means you have to cough up a higher downpayment too. HDB BTO flats are significantly cheaper than resale flats as they aren’t sold by owners looking for capital gains.

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 subsidised	Price	More expensive option than BTOs
Relatively smaller	Flat Size	Bigger & more convenient
Pre-determined by HDB; fewer options	Location	Wider selection of locations
Longer wait time – 3 to 5 years	Waiting period	Shorter wait time – in a matter of months
Max household income limitations for singles, couples & extended families	Income ceiling	No income ceiling limit
One of the applicants must be Singaporean	Eligibility criteria	PRs are allowed to buy HDB resale flats
Generally less; can opt into HDB’s OCS to reduce costs	Renovations cost	Relatively high; up to 40% more than BTO flat
Fresh 99-year lease	Lease tenure	Declining lease
Up to $80,000 for first-timer families	Housing grants	Up to $160,000 for first-timer families
Better resale value after Minimum Occupancy Period	Future market value	Less profitable due to more competition

How much is the HDB downpayment?

Your HDB downpayment will possibly differ depending on two main factors:

• Whether you are applying for an HDB concessionary loan or a 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 loan	Bank loan
HDB BTO	15% CPF or cash	5% cash + 20% CPF
HDB resale	15% CPF or cash	5% cash + 20% CPF
Executive Condo (EC)	Not applicable	5% cash + 20% CPF

Please note that we will only elaborate on the downpayment details of the HDB BTO flat vs HDB Resale flat. Note that you must secure an HDB Loan Eligibility (HLE) letter before applying for an HDB BTO or HDB resale loan.

A HLE letter declares how much HDB is willing to loan you, the repayment period and monthly instalments. You will have to sign the lease agreement and later pay the initial downpayment along with the legal fees and stamp duties.

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

On 16 December 2021, the Singapore government introduced new property cooling measures, according to which the maximum LTV (loan-to-value) has been revised to 85% (from the previous 90%) for all flat applications.

This means homebuyers taking out an HDB loan will have to pay a downpayment of 15% (instead of the previous 10%) of the purchase price. It 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 85% (=$340,000), the HDB downpayment that you will need to pay is $60,000. 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

If a bank is financing your home loan, you can borrow a loan depending on the loan ceiling of your bank loan, which falls between 55% and 75% of the BTO flat’s purchase price.

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 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 15% of the resale flat’s purchase price. It can be paid in cash, using CPF OA balance, or any combination of the two.

Suppose you are buying a 4-room resale flat in a mature estate at around $600,000. With 85% LTV limit (= $510,000), you are obligated to cough up 15% ($90,000) as the initial downpayment. You can pay all of this downpayment through your CPF OA.

• 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.

Should I get an HDB loan or a bank loan?

HDB loan		Bank loan
15% (cash and/or CPF)	Downpayment	25% (min. 5% cash; 20% cash and/or CPF)
2.6% p.a.	Interest rate	1.6% to 2.5% p.a.
Little to no fluctuation	Interest rate fluctuation	Yes, after every few years
Higher	Monthly instalments	Generally low (as interest rates are low)
Practically none	Effort required	Needs to be refinanced every 2 to 3 years
More lenient	Leniency level	Less 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 an HDB flat under the Staggered Downpayment Scheme, you don’t need to pay all the downpayment upfront. You can pay the downpayment in parts, which helps you spread out the financial burden of owning a house. You also 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 months of booking a flat;
• Second instalment: will be paid during key collection.

The 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 cash	Instalment 1 (Downpayment at the signing of the agreement for lease	a) 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 cash	Instalment 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 purchase price between $300,000 – $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 type	CPF housing grant	Income ceiling	HDB grant amount
BTO flat	Enhanced CPF Housing Grant (EHG)	Monthly household income up to $9,000	$5,000 to $80,000 depending on the income (inversely proportional)
Resale flat	Enhanced CPF Housing Grant (EHG)	Monthly household income up to $9,000	$5,000 to $80,000 depending on the income (inversely proportional)
Resale flat	Family Grant	Household monthly income not more than $14,000	SC/SC household buying 2- to 4-room flat: $50,000   SC/SC household buying 5-room or bigger flat: $40,000   SC/SPR household buying 2- to 4-room flat: $40,000   SC/SPR buying 5-room or bigger flat: $30,000
Resale flat	Proximity Housing Grant (PHG)	None	$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.

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 $160,000 (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.