If you’re planning to buy a flat in Singapore, one of the most important things you need to consider is the downpayment. The Housing & Development Board (HDB) requires a downpayment for all flat purchases, and the amount you need to pay depends on the type of flat you’re buying and the loan you’re taking.
Understanding how much downpayment you need to pay for your HDB flat is crucial for your financial planning. If you’re taking an HDB loan, the minimum downpayment you need to pay is 10% of the purchase price, which can be paid in cash, with your CPF-OA, or a mix of both. If you’re taking a bank loan, the minimum downpayment is 25%, which can be made up using 20% CPF OA funds and 5% cash.
Eligibility criteria for HDB loans and additional costs and fees can also affect your downpayment, so it’s important to do your research and plan ahead. In this article, we’ll guide you through everything you need to know about HDB downpayments, so you can make an informed decision and avoid any surprises.
Understanding HDB Downpayment
When purchasing an HDB flat in Singapore, you will need to make a downpayment. The amount of the downpayment will depend on the type of loan you are taking and the purchase price of the flat.
HDB Loan Downpayment
If you are taking an HDB loan, you will need to make a downpayment of 10% of the purchase price. This downpayment can be paid using your CPF Ordinary Account (OA) savings, cash, or a combination of both.
It is important to note that the minimum cash downpayment for an HDB loan is 5% of the purchase price. The remaining 5% can be paid using your CPF OA savings or cash.
Bank Loan Downpayment
If you are taking a bank loan, the downpayment will depend on the Loan-to-Value (LTV) limit and specific loan terms. The LTV limit for bank loans is 75% of the purchase price.
For example, if the purchase price of the HDB flat is $500,000, the maximum loan amount you can borrow from the bank is $375,000. This means that you will need to make a downpayment of $125,000, which is 25% of the purchase price.
With a bank loan, you can usually make up your 25% downpayment using 20% CPF OA funds and 5% cash. However, it is important to note that the minimum cash downpayment for a bank loan is 25% of the purchase price.
In summary, the amount of downpayment you need to make when purchasing an HDB flat in Singapore will depend on the type of loan you are taking and the purchase price of the flat. It is important to understand the minimum downpayment requirements for each type of loan and to plan your finances accordingly.
Eligibility Criteria for HDB Loans
If you are planning to buy an HDB flat and are looking for a loan, you must first check if you are eligible. Here are the eligibility criteria for HDB loans:
HDB Loan Eligibility
To be eligible for an HDB loan, you must meet the following requirements:
- You must be a Singapore citizen or a Permanent Resident.
- Your income must not exceed $14,000 for families, $21,000 for extended families, and $7,000 for singles.
- You must not own or have disposed of any private property in the last 30 months.
- You must not have previously taken an HDB loan or any other housing loan from a financial institution.
CPF Usage
When purchasing an HDB flat with an HDB loan, you can use your CPF Ordinary Account savings to pay for the downpayment, monthly instalments, and other related costs. Here are the requirements for using your CPF savings:
- You must have sufficient CPF savings in your Ordinary Account to pay for the downpayment and other related costs.
- You can use up to 15% of your monthly income to service the loan.
- You must maintain the minimum sum in your CPF account after using your savings for the flat purchase.
It is important to note that the amount of CPF savings you can use for your HDB loan depends on the type of HDB flat you are purchasing. For example, if you are purchasing a new flat, you can use your CPF savings to pay for the downpayment and other related costs. However, if you are purchasing a resale flat, you may need to pay a cash-over-valuation (COV) amount, which cannot be paid using your CPF savings.
In conclusion, before applying for an HDB loan, you must ensure that you meet the eligibility criteria and have sufficient CPF savings to pay for the downpayment and other related costs. By doing so, you can make an informed decision and purchase your dream home without any financial worries.
Additional Costs and Fees
When buying an HDB flat in Singapore, you should also be aware of the additional costs and fees that you may incur. These costs can add up quickly, so it’s important to budget accordingly.
Stamp Duty
One of the biggest costs you’ll face when buying an HDB flat is stamp duty. The amount of stamp duty you’ll need to pay depends on the purchase price of the flat. For HDB flats, the stamp duty rates are as follows:
- Up to $180,000: No stamp duty
- $180,001 to $360,000: 1% of the purchase price
- $360,001 to $1,000,000: 2% of the purchase price
- $1,000,001 and above: 3% of the purchase price
It’s important to note that stamp duty must be paid within 14 days of signing the Option to Purchase (OTP) or Sale and Purchase Agreement (SPA). Failure to pay on time may result in penalties.
Legal Fees
Another cost to consider when buying an HDB flat is legal fees. You’ll need to engage a lawyer to handle the conveyancing process, which includes the transfer of ownership from the seller to the buyer.
Legal fees for HDB flats can vary depending on the complexity of the transaction. Generally, you can expect to pay between $1,500 and $2,500 for legal fees. This includes the cost of searches, registration fees, and other miscellaneous fees.
It’s important to engage a reputable lawyer who is experienced in handling HDB transactions to ensure a smooth and hassle-free process.
Financial Planning for Your HDB
When purchasing an HDB flat, it is crucial to plan your finances carefully to ensure that you can afford the downpayment and monthly mortgage payments. Here are some tips to help you plan your finances for your HDB purchase.
Loan Tenure
The loan tenure is the length of time over which you will repay your HDB loan. The longer the loan tenure, the lower your monthly mortgage payments will be. However, a longer loan tenure also means that you will pay more interest over the life of the loan. It is important to strike a balance between a loan tenure that is affordable and one that does not result in excessive interest payments.
Interest Rates
The interest rate on your HDB loan is a crucial factor to consider when planning your finances. The interest rate determines how much you will pay in interest over the life of the loan. Currently, HDB loan interest rates are lower than bank interest rates, making them an attractive option for many Singaporeans.
It is important to note that HDB loan interest rates are subject to change, so it is important to keep an eye on any changes to the interest rate and adjust your financial plan accordingly.
When planning your finances for your HDB purchase, you should also consider your Total Debt Servicing Ratio (TDSR). Your TDSR is the percentage of your income that goes towards servicing your debt, including your HDB loan. The TDSR limit is currently set at 60%, which means that your total debt repayments, including your HDB loan, cannot exceed 60% of your income.
In summary, when planning your finances for your HDB purchase, consider the loan tenure, interest rates, and your TDSR. By carefully planning your finances, you can ensure that you can afford your downpayment and monthly mortgage payments, and avoid any financial difficulties down the line.
Support Schemes and Alternatives
If you are struggling to come up with the full downpayment for your HDB flat, there are several support schemes and alternatives available to help you make your purchase.
Staggered Downpayment Scheme
The HDB Staggered Downpayment Scheme allows you to pay your downpayment in two instalments. The first payment is 10% of the purchase price, which is due upon signing the Agreement for Lease. The second payment is the remaining 10% of the purchase price, which is due when you collect the keys to your new flat.
This scheme can be especially helpful if you are struggling to come up with the full downpayment amount at once. However, it is important to note that you will still need to pay the full purchase price eventually, so be sure to budget accordingly.
Fiancé/Fiancée Scheme
If you are engaged to be married and both you and your fiancé/fiancée are eligible for an HDB flat, you may be able to take advantage of the Fiancé/Fiancée Scheme. This scheme allows you to apply for an HDB flat together and pay a reduced downpayment of 10% of the purchase price.
To be eligible for this scheme, you must be engaged to be married within three months of the flat’s completion. You must also be both first-time applicants and meet the eligibility criteria for an HDB flat.
Other support schemes and alternatives to consider include the HDB Concessionary Loan, refinancing your existing property, and keeping up to date with the latest property cooling measures.
Remember, it is important to carefully consider your financial situation and budget accordingly before making any major purchases. With the right support and planning, you can find the perfect HDB flat for you and your family.
Frequently Asked Questions
What’s the initial lump sum needed for a resale HDB flat?
The initial lump sum needed for a resale HDB flat depends on the purchase price of the flat and the type of loan you are taking. If you are taking an HDB loan, you will need to pay a downpayment of at least 10% of the purchase price in cash and/or CPF savings. If you are taking a bank loan, you will need to pay a downpayment of at least 25% of the purchase price in cash and/or CPF savings.
Can you tell me the exact percentage for a BTO flat downpayment?
The exact percentage for a BTO flat downpayment varies depending on the loan type you are taking. If you are taking an HDB loan, you will need to pay a downpayment of 10% of the purchase price in cash and/or CPF savings. If you are taking a bank loan, you will need to pay a downpayment of at least 25% of the purchase price in cash and/or CPF savings.
What are the steps to calculate the downpayment for a resale HDB?
To calculate the downpayment for a resale HDB, you will need to first determine the purchase price of the flat. Next, you will need to determine the loan type you are taking and the corresponding downpayment percentage. Finally, you will need to calculate the downpayment amount by multiplying the purchase price by the downpayment percentage.
Is there a difference in downpayment between BTO and resale HDB flats?
Yes, there is a difference in downpayment between BTO and resale HDB flats. For BTO flats, the downpayment percentage is fixed at 10% for HDB loans and 25% for bank loans. For resale HDB flats, the downpayment percentage varies depending on the loan type you are taking.
How does the Staggered Downpayment Scheme work for new homeowners?
The Staggered Downpayment Scheme allows new homeowners to pay their downpayment in two instalments. The first instalment is 5% of the purchase price and is due upon signing the Agreement for Lease. The second instalment is the remaining downpayment amount and is due upon the collection of keys.
What savings should I aim for before considering a HDB purchase?
Before considering a HDB purchase, you should aim to have enough savings to cover the downpayment, stamp duty, legal fees, and other miscellaneous fees. As a general rule of thumb, you should aim to have at least 5% of the purchase price in cash savings and/or CPF savings for the downpayment. Additionally, you should have enough savings to cover the other fees, which can range from 2% to 4% of the purchase price.