By the IQrate Editorial Team | 30 October 2026
New private home sales slowed sharply this quarter, even as prices kept climbing. The Urban Redevelopment Authority’s 3rd Quarter 2026 real estate statistics, released on 23 October, show developers sold 1,183 private homes (excluding ECs), down from 2,141 in the previous quarter, while overall private home prices rose 1.4%. The Business Times described it as a 44.7% plunge in new-home take-up. URA also flagged that about 32,800 private homes, including ECs, could be available for sale over the next one to two years.
With a large pipeline of new launches ahead and mortgage rates edging up after the US Federal Reserve’s September hike, many buyers are weighing an off-plan purchase. If that is you, understanding how a building under construction loan works is essential. Unlike a loan for a completed home, you do not borrow and pay instalments on the full amount from day one. This guide shows what you pay, when you pay it, and how to plan your cash and CPF for a new launch in 2026.
Key Takeaways
- Loans are disbursed in stages. A building under construction (BUC) loan is drawn down progressively as the developer completes each construction milestone.
- You pay the first 25% yourself. Under the standard progressive payment scheme, the buyer pays 5% on the Option to Purchase, 15% on signing the Sale and Purchase Agreement and 5% part of the next stage and 75% bank loan.
- Instalments start small and grow. Interest is charged only on the amount disbursed, so monthly repayments rise from a few hundred dollars to the full instalment at completion.
- Most BUC packages are floating. Many are pegged to SORA, so rising rates during construction affect your instalments.
- You are still assessed at 4%. Banks test your full loan at a 4% medium-term rate under TDSR, even though early instalments are low.
What the Q3 2026 Data Means for New Launch Buyers
| Indicator (Q3 2026) | Figure | Previous quarter |
|---|---|---|
| Private home price index change | +1.4% | +0.5% |
| OCR non-landed price change | +2.3% | −0.1% |
| New private homes sold by developers (ex-ECs) | 1,183 units | 2,141 units |
| New private homes launched (ex-ECs) | 1,140 units | 1,783 units |
| Supply that could be available in 1–2 years | About 32,800 units (incl. ECs) | Not applicable |
Source: URA, 23 October 2026.
Yahoo News Singapore, reporting URA’s flash estimates on 1 October, called it the weakest third-quarter new-home sales since 1998. Analysts at Knight Frank pointed to the limited number of launches during the Chinese Seventh Month as one reason. For buyers, the takeaway is not to time the market but to understand the financing: with a strong launch pipeline, you will likely have choice, and a BUC loan shapes your cash flow for three to four years before you get the keys.
URA itself advised that “households are advised to exercise prudence when purchasing property and taking out mortgage loans”, noting that the outlook for interest rates remains uncertain.
How a Building Under Construction Loan Works
When you buy a completed property, the bank pays the seller the full loan amount on completion and your instalments start straight away. A BUC property is different. The developer bills you in stages as construction progresses, and your bank pays its share of each bill only once your own downpayment has been used up.
That has three practical effects:
- You pay interest only on what has been drawn. Early instalments are small.
- Your instalment changes every time a new stage is billed, as well as whenever SORA resets on a floating package.
- The biggest jumps come at TOP and CSC, when 40% of the price is billed in two steps.
IQrate’s complete guide to buying a BUC property covers the buying process; here we focus on the money.
The Progressive Payment Scheme: What You Pay at Each Stage
Most new launches use the standard progressive payment scheme (sometimes called the normal payment scheme). The schedule below is the one typically used for private developments. Always check the payment schedule in your own Option to Purchase and Sale and Purchase Agreement.
| Stage | % of price | Who pays (75% loan) |
|---|---|---|
| Option to Purchase (booking fee) | 5% | You, in cash |
| Signing the Sale and Purchase Agreement (within about 8 weeks) | 15% | You, cash and/or CPF OA |
| Completion of foundation | 10% | 5% you, 5% bank |
| Reinforced concrete framework | 10% | Bank |
| Partition walls | 5% | Bank |
| Roof and ceiling | 5% | Bank |
| Doors, windows, wiring, plumbing | 5% | Bank |
| Car park, roads and drains | 5% | Bank |
| Temporary Occupation Permit (TOP) | 25% | Bank |
| Certificate of Statutory Completion (CSC) | 15% | Bank |
| Total | 100% | 25% you, 75% bank |
Under MAS rules for new housing loans, loan tenure and loan-to-value limits apply. For a first housing loan at the maximum 75% LTV, at least 5% of the price must be paid in cash.
Illustrative Example: $1.8 Million OCR Condo
Assumptions (illustrative only): purchase price $1,800,000, Singapore Citizen buying a first property, 75% loan of $1,350,000, 30-year tenure, floating rate of 1.57% (3M SORA about 1.27% + 0.30% spread).
Upfront cash and CPF
| Item | Amount |
|---|---|
| 5% booking fee (cash) | $90,000 |
| 15% on signing S&P (cash/CPF) | $270,000 |
| Buyer’s Stamp Duty (cash/CPF, per IRAS rates) | $59,600 |
| 5% at foundation stage (cash/CPF) | $90,000 |
| Total before the bank pays anything | $509,600 |
Buyer’s Stamp Duty is worked out using IRAS’s BSD rates: 1% on the first $180,000, 2% on the next $180,000, 3% on the next $640,000, 4% on the next $500,000 and 5% on the remaining $300,000, which totals $59,600. You can check your own figures with IQrate’s stamp duty calculator.
How your monthly instalment grows
| Stage reached | Cumulative loan drawn | Instalment at 1.57% | Instalment if rate is 2.57% |
|---|---|---|---|
| Foundation | $90,000 | $314 | $359 |
| Framework | $270,000 | $941 | $1,077 |
| Partition walls | $360,000 | $1,255 | $1,436 |
| Roof and ceiling | $450,000 | $1,568 | $1,794 |
| Wiring and plumbing | $540,000 | $1,882 | $2,153 |
| Car park and roads | $630,000 | $2,195 | $2,512 |
| TOP | $1,080,000 | $3,764 | $4,307 |
| CSC | $1,350,000 | $4,705 | $5,383 |
Instalments are calculated on the cumulative amount drawn over 360 months and rounded. Actual bank calculations may differ slightly. The 2.57% column shows the effect of SORA rising by one percentage point.
Two things stand out. First, instalments roughly double between the car park stage and TOP, so make sure your budget is ready for that jump, especially if you are also paying rent or a mortgage on your current home. Second, a one-point rise in SORA adds about $678 a month at full disbursement in this example, which is why rate risk during construction matters. Use IQrate’s BUC progressive payment calculator to model your own project.
Will You Qualify? The TDSR Check at 4%
Banks assess your BUC loan on the full amount, not just the first tranche. Under TDSR, your total monthly debt repayments cannot exceed 55% of gross monthly income, worked out at a medium-term interest rate of 4% (MAS confirmed this assessment rate in Parliament on 7 October 2026).
In our example, the full $1,350,000 loan at 4% over 30 years works out to about $6,445 a month. With no other debts, the borrowers would need gross monthly income of about $11,718 to pass TDSR ($6,445 ÷ 55%). Car loans, personal loans and credit card commitments reduce what you can borrow. Run your own TDSR numbers before you book a unit.
Choosing a BUC Home Loan Package
BUC packages differ from completed-property loans in a few ways worth checking:
- Rate type. Many BUC packages are SORA-pegged floating rates; fixed options are less common. Compare current BUC home loan rates.
- Lock-in timing. Some lock-ins start from first disbursement, others run from TOP. A lock-in that ends near TOP can let you refinance when your loan is largest.
- Cancellation and partial repayment fees. Check penalties if you sell before completion.
- Free conversion. Some banks allow a switch to another package after a set period.
- Developer payment schemes. Deferred payment schemes, where offered, change the timing. See our explainer on deferred vs progressive payment schemes.
Frequently Asked Questions
What is a building under construction loan?
It is a home loan for a property that is still being built. The bank disburses it in stages as the developer completes milestones, so you pay interest only on the amount drawn rather than on the full loan from day one.
Do you pay instalments on a construction loan while it is being built?
Yes. Once the bank starts disbursing, usually after you have paid your own 25%, you pay monthly instalments on the amount drawn so far. Instalments rise as each stage is billed.
How much cash do I need for a new launch condo?
At least 5% of the price in cash for the booking fee, plus a further 15% at S&P signing (cash or CPF), stamp duty and, with a 75% loan, another 5% at the foundation stage. For a $1.8 million unit, that is about $509,600 including BSD (illustrative).
Can I use CPF for a BUC property?
Yes, CPF Ordinary Account savings can generally be used for the downpayment beyond the minimum cash portion, for stamp duty and for monthly instalments, subject to CPF limits and the property’s remaining lease.
Can I get a fixed rate for a building under construction loan?
Some banks offer fixed BUC packages from time to time, but floating SORA-pegged packages are more common. Compare options carefully, as rates can change significantly over a three- to four-year build.
Final Thoughts
The latest URA data shows a quiet quarter for new launches but rising prices and a large pipeline ahead. For buyers, the opportunity lies in planning, not timing. A building under construction loan spreads your borrowing over the build, keeping early instalments low, but it also leaves you exposed to rate changes and to a sharp jump in repayments at TOP. Know your stage-by-stage cash needs, pass the 4% TDSR test with room to spare, and choose a package whose lock-in fits your completion date.
How IQrate Can Help
IQrate compares BUC home loan packages across Singapore’s banks, including lock-in start dates, cancellation fees and free conversion terms, so you can match your loan to your project’s timeline. Thinking about a new launch? Book a complimentary, no-obligation consultation with an IQrate Mortgage Specialist to map out your progressive payments, CPF usage and the right loan package. Contact IQrate today.
