1. Housing Loan Eligibility Criteria
Basic Requirements
To qualify for a home loan, you must:
- Be at least 21 years old.
- 35 years old under a single scheme.
- Have a steady income.
- Not be an undischarged bankrupt.
Depending on whether you apply for a bank loan or an HDB loan, the criteria differ.
HDB Housing Loan Eligibility (HLE)
- At least one buyer must be a Singapore citizen.
- Monthly household income ceiling for families: $14,000 (or $21,000 for extended families).
- Monthly income ceiling: $7,000 for single (2-room flexi, non-mature).
- You cannot own a property in Singapore or overseas.
- No private property ownership in the past 30 months.
- Must not have taken 2 or more previous HDB loans.
Check full HLE conditions here: HDB | Housing Loan from HDB
2. Understanding Loan Types: HDB Loan vs Bank Loan
| Feature | HDB Housing Loan | Bank Loan |
| Max LTV | Up to 75% as at August 2024 | Up to 75% |
| Interest Rate | 2.6% (pegged to CPF rate + 0.1%) | Floating or fixed, often lower than 2.6% |
| Downpayment | 25% (can be all CPF) | 5% cash + 20% CPF/cash |
| Early Repayment Penalty | No | Usually 1.5% of loan amount |
| Flexibility | More forgiving | More strict on late payment |
3. TDSR & MSR Rules
Total Debt Servicing Ratio (TDSR)
- Max 55% of your gross monthly income can go toward all loan repayments (housing, car, credit cards, etc.)
- Banks calculate using a stress-tested interest rate: higher of 4% or the actual package rate.
Mortgage Servicing Ratio (MSR)
- Applies only to HDB or EC purchases.
- Max 30% of gross income can go toward mortgage payments.
4. Housing Loan Tenure Limits
- HDB flats: Max 25 years, can be extended to 30 years, subject to 20% cut on loan to value.
- Private property: Max 30 years, can be extended to 35 years, subject to 20% cut on loan to value.
- LTV drops if tenure > 25 years for HDB and > 30 years for private residential or if the loan extends past borrower’s age 65.
5. Interest Rate Types in Singapore
Floating (SORA-pegged)
- Pegged to SORA (Singapore Overnight Rate Average).
- Updates every month or quarter, depending on 1M SORA or 3M SORA.
- Potentially lower but exposed to fluctuations.
Fixed Rate
- Fixed for 1–5 years.
- Predictable monthly repayments.
- May revert to floating after the lock-in period.
6. How to Apply
- Check Housing Loan Eligibility: HLE (for HDB) or get a bank In-Principle Approval (IPA).
- Compare housing loan packages across banks (interest rates, lock-in period, fees)
- Secure the Option to Purchase (OTP) for the property.
- Submit your housing loan application with supporting documents.
- Wait for the Letter of Offer and sign to confirm.
7. Smart Tips Before Applying
- Get in-principle approval first to find out how much you can borrow.
- Maintain a good credit score.
- Reduce other debts before applying (affects TDSR).
- Use online calculators to estimate monthly repayments.
- Budget for additional costs: legal fees, stamp duty, renovation, fire insurance, etc.
Conclusion
Buying a home is one of the biggest financial decisions in your life. Understanding housing loan eligibility, rates, and repayment strategies can save you a lot of money over time. Need help comparing current bank loan packages or understanding your borrowing power based on your income? Let us know, we can do the heavy lifting for you!
Would you like assistance in finding the best home loan rates? 😊