Private residential property prices in Singapore rose by 2.8% quarter-on-quarter, according to URA Q4 2023 statistics. Despite rising prices, 78% of Singaporean youths aged 18 to 35 still aspire to own private property, as revealed by the TODAY Youth Survey 2023. But exactly how much of the bill do you have to foot upfront?
A downpayment is the initial upfront payment required when purchasing a property, usually a percentage of the total cost. Understanding this amount is essential for prospective buyers, especially in Singapore’s competitive real estate market.
This guide explains the specifics of condo downpayments in Singapore, including requirements, funding sources, and key factors that determine the amount needed.
How Much is the Downpayment for a Condo?
When purchasing a condo in Singapore, one of the first financial hurdles you’ll encounter is the downpayment. Typically, the downpayment required ranges from 5% to 25% of the property’s purchase price. The exact percentage depends on various factors, including the type of loan you secure and your financial situation.
For most buyers opting for a 75% bank loan, the downpayment is set at 25% of the condo’s purchase price. Out of this 25%, a minimum of 5% must be paid in cash. For example, if the condo you’re eyeing costs S$500,000, your cash payment would amount to S$25,000.
Here is a simple breakdown:
| Example Downpayment Breakdown for a S$500,000 Condo
Total downpayment (25%): S$125,000 |
|
| Component | Amount |
| Minimum Cash Payment (5%) | S$25,000 |
| Remaining Downpayment (20%) | S$100,000 |
| Payment Options for Remaining Downpayment | Cash or CPF Ordinary Account |
The remaining 20% can be covered either through cash or by utilizing your CPF Ordinary Account savings, offering some flexibility depending on your available resources.
How About the Minimum Deposit for a Condo?
In Singapore, the minimum deposit required for a condo purchase is governed by the Loan-to-Value (LTV) ratio, which is set by the Monetary Authority of Singapore (MAS). The LTV ratio determines the maximum amount you can borrow from the bank, and consequently, the size of the downpayment you need to make.
The government enforces a Minimum Downpayment Regulation, ensuring that buyers must pay at least a certain percentage of the property’s purchase price upfront. The minimum deposit is the upfront cash amount needed to secure a condo. This typically includes 5% of the property’s purchase price, payable in cash.
While the minimum deposit is just 5%, the full downpayment constitutes 25% of the purchase price. The remaining 20% can be covered by a combination of cash and CPF for citizens and PRs, whereas foreigners must pay the full 25% in cash.
Factors Determining the Minimum Deposit Amount
Several factors influence the minimum deposit amount you’ll need to have on hand when buying a condo in Singapore. Understanding these factors can help you plan your finances more effectively and ensure you’re prepared for the upfront costs.
1. Buyer’s Stamp Duty (BSD)
Buyers need to pay BSD for the documents executed for the transfer or sale and purchase of a Singapore property. As for the basis of computing the BSD, it depends on whichever is higher between:
- The purchase price as indicated in the document to be stamped
- The market value of the property
Current BSD Rates
| Price of Condo or Market Value of the Property | BSD Rates (for residential properties) | BSD Rates (for non-residential properties) |
| First S$180,000 | 1% | 1% |
| Next S$180,000 | 2% | 2% |
| Next S$640,000 | 3% | 3% |
| Next S$500,000 | 4% | 4% |
| Next S$1,500,000 | 5% | 5% |
| Remaining Amount | 6% | N/A |
Source: IRAS BSD
2. Additional Buyer’s Stamp Duty (ABSD)
On top of the BSD, condo buyers also need to pay ABSD. However, there are exemptions, depending on citizenship status and previous homeownership. Knowing these conditions, in some cases, can help buyers avoid paying ABSD.
Current ABSD Rates and Computation
| Profile of Buyer | ABSD Rates on or after 27 Apr 2023 |
| Singapore Citizens (SC) buying first property purchase | Not applicable |
| SC buying second residential property | 20% |
| SC buying third and subsequent properties | 30% |
| Singapore Permanent Residents (SPR) buying first residential property | 5% |
| SPR buying second residential property | 30% |
| SPR buying third and subsequent residential property | 35% |
| Foreigners (FR) buying any residential property | 60% |
| Entities buying any residential property | 65% |
| Housing Developers buying any residential property | 35%4
(Plus Additional 5% (non-remittable)5) |
Source: IRAS ABSD
3. Loan-to-Value (LTV) Limit and Minimum Cash Downpayment
Both LTV and outstanding mortgages not only serve as the basis for calculating minimum downpayment. It also affects the amount you need to pay in cash.
For a private condo, you produce the cash to pay for the downpayment. But that is not the case with an executive condo. Usually, buyers would use a combination of CPF OA and cash.
Minimum Cash Downpayment Based on LTV
Note: This table is only for loan tenures that do not exceed 30 years or the buyer does not exceed the age of 65 by the time the loan tenure ends.
| Number of Outstanding Mortgages | LTV Limit | Minimum Downpayment | The portion of Downpayment Paid in Cash |
| 0 | 75% | 25% | 5% |
| 1 | 45% | 55% | 25% |
| 2 or more | 35% | 65% | 25% |
Minimum Cash Downpayment Based on LTV (Loan Tenure 30 years or more)
Note: This table is only for loan tenures that exceed 30 years or the buyer exceeds the age of 65 by the time the loan tenure ends.
| Number of Outstanding Mortgages | LTV Limit | Minimum Downpayment | The portion of Downpayment Paid in Cash |
| 0 | 55% | 45% | 10% |
| 1 | 25% | 75% | 25% |
| 2 or more | 15% | 85% | 25% |
Example of Minimum Cash Downpayment
- Condo price: S$2,000,000
- Loan tenure: 20 years
- Buyer’s age: 30 years old
In this example, the LTV is 75% if the buyer has no previous home loan. The loan tenure is under 30 years, and the buyer would only be 50 years old by the time it matures.
Computation:
- S$2,000,000 x 25% = S$500,000 (total minimum downpayment amount)
Depending on the property type, he may or may not need to use cash. If it is a private condo, the buyer needs to come up with S$500,000 from savings and other funds.
If it is an EC, the buyer can seek a grant from the HDB. Moreover, the buyer can use CPF Ordinary Account to pay the downpayment. But the one condition is that the 5% (S$25,000 in the example) is cash.
Older buyers and those with previous home loans, as your might surmise, will end up paying higher downpayment amounts.
Breakdown of the Initial Cost of Buying a Condo (DP + BSD + ABSD)
Condo downpayment is not the only initial cost. You also need to pay the buyer’s stamp duties.
In the following section, the sample computations assume the property purchase price is S$1,000,000.
| Costs | Citizen | Permanent Resident | Foreigner |
| Home Ownership | 1st home | 1st home | 1st home |
| Loan Tenure (years) | Less than 30 | Less than 30 | Less than 30 |
| Age at the End of Loan Tenure | Under 65 | Under 65 | Under 65 |
| Previous Loan Already Paid | N/A | N/A | N/A |
| LTV | 75% | 75% | 75% |
| Condo Downpayment Rate | 25% | 25% | 25% |
| Condo Downpayment Amount | S$250,000 | S$250,000 | S$250,000 |
| Minimum Portion of Downpayment Payable in Cash | 5% | 5% | Not applicable (downpayment to be paid in cash fully as no CPF account) |
| BSD Payable | S$24,600 | S$24,600 | S$24,600 |
| ABSD Rate | N/A | 5% | 30% |
| ABSD Payable | N/A | S$50,000 | S$300,000 |
| Total Upfront Cost | S$274,600 | S$324,600 | S$574,600 |
Sources of Downpayment Funds
When it comes to funding your condo downpayment in Singapore, you have several options at your disposal. Understanding these sources can help you plan and allocate your finances more effectively, ensuring you’re well-prepared for the initial payment.
Using Cash Savings
One of the most straightforward ways to finance your condo downpayment is through cash savings. This is particularly important for the minimum cash component of your downpayment, which typically makes up 5% of the property’s purchase price. Having sufficient cash savings set aside is crucial, as this portion cannot be covered by other means such as CPF.
Utilizing CPF Ordinary Account Savings
Another significant source of funds is your CPF Ordinary Account (OA) savings. After meeting the minimum cash requirement, you can use the balance in your CPF OA to cover the remainder of the downpayment.
This option is especially beneficial as it allows you to reduce your cash outlay and maximize your CPF savings. For many buyers, CPF savings provide a substantial portion of the required downpayment, easing the financial burden.
Combination of Cash and CPF
For most homebuyers, a combination of cash and CPF savings is the most practical approach. By strategically using both sources, you can meet the downpayment requirements without exhausting your cash reserves. This balanced approach allows you to maintain liquidity while still making the necessary upfront payment for your condo. By carefully planning how much to draw from each source, you can optimize your financial position and manage your resources effectively.
Closing
Buying a condo in Singapore involves careful financial planning, particularly when it comes to downpayment requirements. Understanding the various factors that influence the downpayment amount, such as the LTV ratio, property type, and your financial profile, is crucial for making informed decisions. By leveraging your cash savings and CPF funds wisely, you can manage the financial commitments and take a significant step towards owning your dream home.
Key Takeaways:
- The downpayment for a condo in Singapore usually ranges from 5% to 25% of the purchase price, with at least 5% paid in cash.
- Key factors include the Loan-to-Value (LTV) ratio, property type, and your financial profile, which influence how much you need to pay upfront. Your creditworthiness and whether you have other outstanding loans also impact the downpayment percentage.
- You can use a mix of cash savings and CPF Ordinary Account savings, with the minimum cash portion typically being 5% of the property’s price.
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