A Singaporean’s Guide to HDB Loan Eligibility (HLE) Validity and How Your HLE Letter Works

You’ve been on the hunt for a resale HDB property for months, and finally, you found the perfect one! To make sure you’ll get the flat you want, you asked the seller for an Option to Purchase (OTP). However, you found out that the seller can’t grant an OTP unless you have a valid HDB Loan Eligibility (HLE) Letter from HDB.

An HLE Letter is a prerequisite for applying for an HDB flat, whether new or from the resale market. Thankfully, it’s easy to obtain one. Here’s a simple guide to obtaining an HLE letter, what it is for, and the eligibility criteria to get one.

 

What is HDB Loan Eligibility?

HDB Loan Eligibility (HLE) is a list of criteria set by the Housing Development Board (HDB) to properly assess each candidate applying for an HDB housing loan. This set of criteria enables HDB to keep flat values consistent. As a result, eligible candidates can purchase affordable, government-subsidized properties.

For instance, one of the HDB Loan Eligibility criteria is an income ceiling of S$14,000 for families (or S$21,000 for extended families). This keeps high-earners from inflating property values. It also means that HDB will not grant flats to too-low income earners who have a high risk of defaulting on the loan.

The HLE guidelines will help HDB grant HDB loans only to ideal buyers. In doing so, they can limit purchases, control property construction speeds, and maintain consistent property prices.

On top of the HDB home loan eligibility guidelines, you also need to pass the credit assessment criteria. If you are eligible for both, you can then apply for an HDB Loan Eligibility (HLE) Letter.

Take a look at this illustration for a quick reference for the credit assessment criteria:

Credit Assessment HLE

 

How HDB Loan Eligibility Letter Works and Why It’s Necessary?

HDB Loan Eligibility (HLE) Letter is proof that the HDB has given you approval for a housing loan. It means you qualify for an HDB loan based on the documents you’ve submitted. It’s also a requirement when you want to apply for an HDB concessionary loan.

Your HLE Letter will have the following details:

  • The maximum loan amount you can borrow
  • Monthly installments
  • Repayment period
  • Flat type
  • Flat lease

So how does it work?

First, you’ll need to check your eligibility. You can find the complete list of eligibility conditions on the HDB website. If you are unsure, you can also check your eligibility at HDB | Eligibility Check to determine whether you meet the conditions.

Once done, you can apply for an HLE letter. All you have to do is upload your documents at www.hdb.gov.sg/hleapply. You will then be given an HDB HLE number.

Note: Provide the correct information and complete documents. If there is an error in the information provided or the documents are incomplete, your HLE application will not be processed.

 

What Do I Need The HLE Letter For?

As previously stated, an HLE letter is required for those who wish to apply for an HDB concessionary housing loan. You will also need an HLE Letter for the following:

1. Purchasing a New BTO Flat

You’ll need an HLE letter before your first appointment. An HLE letter allows you to apply for an HDB concessionary loan and reserve an HDB flat.  If your application for an HLE Letter is rejected, you cannot apply for an HDB concessionary loan.

2. Resale Buyers

You will also need to apply for and obtain an HLE letter when you’re buying a resale flat. The reseller doesn’t have to get one. One of the reasons for applying is for the HDB to assess the reseller’s property and approve the proposed resale amount.

As previously mentioned, HDB monitors every HDB property sale. In doing so, they can adjust the LTV limit, so the properties are affordable for the average Singaporean worker. Additionally, the House Development Board must grant the sale’s legalization. If the reseller fails to inform the HDB, they will receive penalties and be banned from owning an HDB flat.

3. Property Transfer

For example, your parents want to transfer the ownership of their HDB property to you. You will still need an HLE letter. Why? To inform the HDB of the activity and to prevent property value inflation. Additionally, it allows HDB to assess whether the individual taking over the property fits the eligibility requirements.

 

How Much HDB Loan Can I Take?

The maximum HDB loan amount you can borrow will depend on several factors, such as:

  • Your credit assessment
  • LTV limit
  • Remaining lease of the HDB flat
  • And other HDB policies

For instance, those who purchase a flat with a remaining lease that can cover the youngest buyer up to the age of 95 may borrow up to 90% of the flat’s purchase price or value (LTV).

However, for those purchasing a flat with a remaining lease that cannot cover the youngest buyer up to the age of 95, the maximum HDB housing loan amount they may borrow will be pro-rated from the 90% LTV.

Note: Loan To Value Limit (LTV) is the maximum loan amount you can borrow for a property. It is expressed as a percentage of the total property value.

 

HLE Letter Validity

The HDB Loan Eligibility (HLE) letter is valid for six months from the date of issue. There’s no need for re-assessment during this period. However, make sure that there are no changes in your financial position or family nucleus.

Once the HLE validity expires, you’ll need to apply for a new HLE Letter. You may apply for a new one a week before your current HLE letter expires. 

There are certain cases wherein the HDB asks why there was a delay in your loan application using the letter. Repeatedly delaying your HDB housing loan application using the HLE letter may cause suspicion, leading to rejection when you apply for a new letter.

 

What Happens When My HLE Validity Expires? 

In the event that your HLE Letter expires or is near expiry but still unable to find your desired home or failed to book an appointment, you may reapply for a new one, ideally a week before the expiry date, and if you still need a valid HLE Letter. This can be done by calling up and secure an appointment with HDB Officers of the estate.

 

Review of HLE

During your housing loan application, the HDB may review your letter. Here are some of the reasons why:

  • If there is any incorrect information in the borrower’s data. Or if HDB has reason to question the data provided.
  • There are changes in your household income and other events that may affect your eligibility for HDB loans.
  • There is a change in your family nucleus.
  • There are changes in HDB policies that will make you ineligible to buy a flat and/or apply for an HDB housing loan.

 

Eligibility and Requirements

Criteria Conditions
Citizenship At least 1 buyer is a Singapore citizen
Household Status – Have not previously taken 2 or more housing loans from HDB

– Have taken 1 housing loan from HDB, and the last owned property is not private residential property (local or overseas) such as:

  • HUDC flat
  • Property acquired by gift.
  • Property inherited as a beneficiary under a will or as a result of the Intestate Succession Act.
  • Property owned/ acquired/ disposed of through nominees
Income Ceiling – Average gross monthly household income does not exceed:

$14,000* for families

$21,000* for extended families

$7,000* for singles buying a 5-room or smaller resale flat or a 2-room new flat in a non-mature estate, under the Single Singapore Citizen (SSC) Scheme

– If an applicant or occupier is unemployed for less than 3 months, his/ her average income will be computed based on the actual number of months he/ she has worked.

Citizenship At least one buyer is a Singapore citizen
Ownership/ Interest in Property – Have not previously taken two or more housing loans from HDB
Income Ceiling Does not exceed household income ceilings

 

        S$14,000 for families

        S$21,000 for extended families

        S$7,000 for singles buying a 5-room or smaller resale flat or a 2-room new flat in a non-mature estate, under the Single Singaporean Citizen (SSC) Scheme

Ownership/Interest in Property         Must not own or have disposed of any private residential property in the 30 months before the date of application for an HDB Loan Eligibility (HLE) letter.

 

        Do not own more than one market/hawker stall or commercial/industrial property

 

What Documents Do You Need To Apply For The HLE Letter?

To obtain an HLE letter, you need to provide the following set of income and supporting documents. You can submit them here.

Here’s a list of supporting documents you’ll need. Check out the HDB website if you want the complete income guidelines.

Employee with CPF contributions

  • Three months’ payslips
  • Latest 15 months’ CPF contribution history

Employee without CPF contributions

  • 6+ months’ payslips
  • Credit Bureau Report
  • Latest 6+ months’ bank statements/passbook

Self-employed

  • Latest Notice of Assessment from IRAS or Certified Annual Statement of Accounts from an auditing firm
  • Credit Bureau Report
  • Latest 6+ months’ bank statements/passbook

Commission-based or part-time worker

  • 6+ months’ commission statements or payslips
  • Latest 15 months’ CPF contribution history
  • Credit Bureau Report
  • Latest 6+ months’ bank statements/passbook

Odd job worker

  • Latest Notice of Assessment from IRAS or a recent letter from the employer certifying job designation, commencement date, and commission/salaries for 6+ months
  • Latest 15 months’ CPF contribution history
  • Credit Bureau Report
  • Latest 6+ months’ bank statements/passbook

Unemployed

  • Income proof for the preceding month(s) from the previous employer stating your gross monthly income and last day of service
  • Latest 15 months’ CPF contribution history

 

How Long Should I Wait For The HLE Letter?

The HDB will process your HLE letter application within 14 days of receiving the complete documents. That said, make sure to provide the correct information and submit all documents to avoid delays or getting rejected.

To check the status of your application, you may log into My HDBPage. Go to My Flat > Application Status > HLE.

 

Conclusion

Key Takeaways:

  • An HLE Letter is required when applying for an HDB flat – whether you’re buying a resale or new flat.
  • Apply and obtain an HLE letter before signing an Option to Purchase. This letter is proof that the HDB has given you approval for a housing loan and that you fit the eligibility requirements.
  • The HLE is a list of criteria set by the Housing Development Board (HDB) to properly assess each candidate applying for an HDB loan.

The Housing Development Board’s subsidized public housing makes it possible for ordinary Singapore workers to purchase the home of their dreams. However, to apply for an HDB loan, you’ll need to apply and obtain an HLE Letter. Click here to read more on HLE Letter and how to apply for it.

But if for some reason you still need extra cash, say for a downpayment, you may consider the services of a licensed moneylender. Use a loan comparison tool, such as Instant Loan, to find the best loan tenure, lowest interest rates, and most suitable terms and conditions. Instant Loan will help you make a smart financial decision.

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