Buying your first home is a major financial decision, and securing the right mortgage loan is crucial. Here’s a step-by-step guide for first time home buyers in Singapore.
1. How Much Loan Can You Get? (Loan-to-Value Ratio & MSR/TDSR)
The amount you can borrow depends on LTV, MSR, and TDSR:
Loan-to-Value (LTV) Ratio – Maximum loan amount you can borrow:
- HDB Concessionary Loan: Up to 75% of the flat’s price or valuation
- Bank Loan: Up to 75% (with 25% down payment)
Mortgage Servicing Ratio (MSR) – Applies only to HDB flats/ECs (Uncompleted)
- Max 30% of gross monthly income
Total Debt Servicing Ratio (TDSR) – Applies to all property loans
Max 55% of gross monthly income (including car loans, student loans, etc.)
Example:
If your monthly income is $6,000, your max TDSR is $3,300 (55%). If you have car or credit loans of $500 per month, the calculation for your maximum mortgage repayment reaches $2,800 at the regulatory stress test rate.
2. Down Payment & Fees
Depending on your loan type, you’ll need to pay a down payment:
| Loan Type | Down Payment |
| HDB Concessionary Loan | 25% (Fully CPF OA) |
| Bank Loan (No other home loan) | 25% (Min 5% Cash + 20% CPF/Cash) |
Other Costs to Consider:
- Buyer’s Stamp Duty (BSD): 1%–4% of property price
- Legal Fees: ~$2,500–$3,500
- Valuation Fees: ~$200–$500
- Home Insurance: Required for HDB flats and Bank loan
- Mortgage Insurance: Required for HDB flats when using CPF OA to service home loans.
💡 Tip: Ensure you have enough CPF savings and cash before applying for a mortgage.
3. Steps to Apply for a Mortgage Loan
Step 1: Get Your Loan Eligibility (HLE or IPA)
- HDB Loan: Apply for an HDB Loan Eligibility (HLE) letter
- Bank Loan: Get an In-Principle Approval (IPA) from banks
Step 2: Secure Your Down Payment
- Ensure you have enough CPF OA savings and cash.
Step 3: Choose the Right Loan Package upon confirmation of deposit to purchase
- Compare rates from banks (fixed vs floating).
Step 4: Submit Your Loan Application
- Provide income documents, CPF statements, credit reports.
Step 5: Sign the Loan Agreement
Once approved, sign and finalize your home loan, appoint conveyancing lawyers etc.
Step 6: Conduct periodic reviews of home loan
- Banks tend to offer lower interest rates during the first few years within the lock in period. Therefore it is paramount to your interest to conduct periodic reviews (3 months before the expiry of your lock-in period ) as you might be able to find better deals available in the market.
4. Tips for First Time Home Buyers
Use CPF Wisely – You can use CPF OA for down payment and monthly repayments
Check Loan Packages – Compare rates and lock-in periods
Avoid Over-Borrowing – Ensure affordability/cash flow is within acceptable budgets.
Monitor Interest Rates – Consider refinancing if bank rates rise
Contact IQrate
Reach out to our Mortgage Broker for a complimentary home loan consultation to find out which type of package suits your needs for a new property purchase or refinancing.
Would you like assistance in finding the best home loan rates? 😊