Pros And Cons Of Taking A Loan In Singapore11 (1)

Total Amount of HDB Downpayment in Singapore


Owning an HDB flat in Singapore is an affordable solution to your housing needs. The government makes it easy for Singaporeans to have a new home through the Housing Development Board (HDB) flat loan. As long as you’re a Singaporean citizen, and your income qualifies with your desired property’s value, then you can own an HDB flat in no time.

Furthermore, the HDB loan makes it easy to purchase a 2-room Flexi flat or 3-room flat if you have sufficient down payment. Alternatively, a bank loan can finance your HDB flat if the rates and terms are better. In any case, you have many loan options that will handle your flat’s purchase price, stamp duty, and other details.


How Financing Methods Dictate Your Total HDB Flat Downpayment

Your total loan down payment depends on the payment scheme you’ll use. Singaporeans have three options, which we’ve listed below. But before that…

Let’s take a short refresher on checking HDB flat availability. The HDB website regularly informs potential homebuyers of property sales launches, which they announce 3-6 months beforehand. 

However, because thousands of other Singaporeans are vying to get their own property, you’ll need to cast your ballot (costing you $10). You can try unlimited times to win the property’s purchasing right.

Singaporeans will know their application results after three weeks to a month after casting their ballot. If you win the raffle, then you will have full access to HDB’s financing services and bank loans.



Payment Schemes

Man using a calculator to calculate expenses from receipts

1. HDB Housing Loan

Total Downpayment: 10% of the property’s purchase price. This means you’ll be dealing with the following figures:

  • 2-Room Flexi Flat: S$250,000 – S$300,000. Potential downpayments: S$25,000- SS$30,000
  • 3-Room: S$300,000 – S$400,000. Potential downpayments: S$30,000- S$40,000
  • 4- Room or bigger: S$400,000 and beyond. Potential downpayments: S$40,000 and above

Truthfully, HDB’s housing loan is the simplest when calculating your expenses. Furthermore, you can have HDB integrate your CPF ordinary account contributions to pay for your housing loan. Truthfully, it will involve some additional fees if you plan on using CPF, but you won’t need to pay for your HDB loan bank with higher interests if you go through with this process.

2. Bank Loan

You can only qualify for loans from banks if you have proof that you’ve won the HDB lottery. Those who’ve won receive an HDB Letter of Offer, which you’ll present to your choice’s financial institution. Once you’ve accomplished this, you can push through with your loan application.

  • Loan Ceiling: 75% of Flat Value
  • Required Down payment: 20% of Property Value
  • Mode of Payment: Up to 5% in cash. CPF Ordinary Account pays for the remainder.

Here’s a breakdown of the amounts you’ll pay per property:

2-Room Flexi

  • Flat Value: S$250,000 – S$300,000
  • Ceiling Total: S$187,500 – S$225,000
  • Total Downpayment: S$50,000 – S$60,000


  • Flat Value: S$300,000 – S$400,000
  • Ceiling Total: S$187,500 – S$300,000
  • Total Downpayment: S$60,000 – S$80,000

4-Rooms and Beyond

  • Flat Value: S$400,000 and beyond
  • Ceiling Total: S$300,000+
  • Total Downpayment: S$80,000+

Some banks offer a loan that allows you to pay using the following figures

  • Ceiling: 55% of Calculation Value for Flat
  • Required Downpayment: 20% of Property Value
  • Mode of Payment: Up to 10% paid in cash. The rest, you can pay with CPF Ordinary Account Savings

Here’s a sample for HDB calculation for your total downpayment using this scheme

2-Room Flexi

  • Flat Value: S$250,000 – S$300,000
  • Ceiling Total: S$137,500 – S$165,000
  • Total Downpayment: S$50,000 – S$60,000


  • Flat Value: S$300,000 – S$400,000
  • Ceiling Total: S$165,500 – S$220,000
  • Total Downpayment: S$60,000 – S$80,000

4-Rooms and Beyond

  • Flat Value: S$400,000 and beyond
  • Ceiling Total: S$220,000+
  • Total Downpayment: S$80,000+

All your legal fees and stamp duty processing fees, you can pay using cash or CPF. For the first S$180,000 of your payment, you’ll only need to pay 1% of the total property value. Upon reaching the next S$180,000, you’ll pay 2% of the property value. You’ll only pay the flat rate of 3% of legal fees and stamp duty for the remaining S$180,000 and payments you’ll make.

3. Staggered Downpayment Scheme

This scheme allows you to pay half your downpayment upon signing your lease agreement. Truthfully, this scheme works like a rent-to-own arrangement, but you can’t live inside the property. You only receive your keys when you’ve finally signed the Terms of Agreement after paying the next downpayment half.

  • Agreement for Lease Signing Downpayment: Up to 5% of property value in cash plus 5% using your CPF Ordinary Account
  • Payment Upon Second Half: You’ll pay 15% using your CPF 

Here are some example calculations to help you gauge how much you’re dealing with:


  • Flat Value: S$250,000 – S$300,000
  • Lease Signing Downpayment: S$12,500- S$15,000 (5% of property value)
  • Collection of Keys Final Down Payment Value: S$37,500 – S$45,000


  • Flat Value: S$300,000 – S$400,000
  • Lease Signing Down Payment: S$12,500 – S$20,000 (5% of property value)
  • Collection of Keys Final Down Payment Value: S$45,000 – S$60,000

4- Room and Beyond

  • Flat Value: S$400,000 and beyond
  • Lease Signing Downpayment: S$20,000+ (5% of property value)
  • Collection of Keys Final Down Payment Value: S$60,000+

Comparing HDB and Bank Loans

Seesaw balance benefits

Truthfully, there are plenty of pros and cons for both HDB loan and bank loans. The differences can come from interest rates, penalties, allowed cash payments, stamp duties, purchase price, and other details.

Below, we’ll break down the significant differences between a Housing Development Board loan and a bank loan for HDB to help you make an informed and practical decision for your property.

Bank Financing


When it comes to interest rates, banks provide you with the lowest interest rates. Truthfully, the HDB Letter of Offer is their only requirement, adding to the credit report, documents, and citizenship as working and employed Singaporeans. 

Banks have streamlined most of the bank loan financing process. Additionally, they’ve adopted many of their financial products’ features and processes to accommodate any purchase price. However, the majority of stamp duty and legal fees will still remain the buyer’s responsibility.


Unfortunately, you can’t finish your financing early with a bank loan. Even if your CPF has enough to pay all your dues, you’ll receive a considerable penalty for early repayment. This penalty is above the penalties you’ll receive for using part of your CPF to pay for all your financing.

Additionally, bank interest rates remain stable only for the first two years. Naturally, these will increase per year, depending on property appreciation and added bank fees. In some cases, financial institutions have had experiences of increased expenses because of ballooned interest rates.

Lastly, you’ll pay for a higher down payment if you compare it to your loan downpayment. Furthermore, bank loans can only pay for 75% of the total property value, which is troublesome if you compare it to the loan’s capacity to pay it fully.

Furthermore, you can’t shift from a bank loan to HDB financing once you’ve applied, received approval, and signed your contract with the bank. However, you can shift from a bank loan to another bank loan if your chosen bank permits it. On the other hand, that is a highly unlikely scenario in most bank terms and conditions.

Flat HDB Loan 


These loans require a significantly smaller down payment of 10% from prospective buyers. It’s the most stable option because you won’t need to save up for so long. Furthermore, you won’t have additional requirements to submit. The process is faster than bank loans as long as you comply with all of the Housing Development Board’s required documents and eligibility, such as specific stamp duty and legal fees.

Additionally, you’ll only contend with a fixed interest rate that does not add up yearly. Your penalties for missed repayments will increase due to your interest. This feature is convenient because you can gauge your financial situation with more accuracy by working through precise figures that will not change. In short, you can stretch out some more cash without worrying that your interests will change in the following year.

If you’re not satisfied with the Housing Development Board’s financial product, you can change and use a bank loan to finance your property. The government agency will not penalize you for changing your financing. You can still face additional costs to process documentation and permission to shift to private banking as your primary financial product.

Lastly, you can pay the entire financing amount early through the Housing Development Board’s program without penalties. If you’re worried you might spend money that can repay your entire housing debt swiftly, you won’t need to worry about highly expensive penalties. 


However, the government-provisioned housing loan is not without its flaws. The interest rate buyers will get is consistent, but it remains higher than the essential interest rate banks offer, especially during the first years of repayment.

On the other hand, if you’ll choose stability rather than uncertainty over interest rates, it’s truthfully best to work with the Housing Development Board’s financial product.

  Advantages Disadvantages
Bank Financing 1. Low Interest Rates
2. Accommodates virtually every HDB purchase price
1. Buyer will shoulder stamp duty and legal fees
2. Penalties for finishing to pay your loan early
3. Low early interest rates (two years), ballooning late interest rates
4. Higher downpayment in comparison to HDB 
5. Pays only for 75% of HDB property value
6. Can’t shift to HDB loans later on
HDB Loan 1. Smaller 10% downpayment than 20% from banks
2. Fixed interest rates throughout
1. Buyer will shoulder stamp duty and legal fees
2. Higher initial interest rates than bank offers


Proper Financial Planning Makes Every Flat Financing Successful

Financial planning is all about committing yourself towards the goal of paying your housing loan and finding the best interest rates and terms that can work for you. Unfortunately, it can be difficult to own a property, especially if you have a low credit score.

It’s difficult to pay the full housing loan repayments in cash. Furthermore, you can only use your CPF to an extent. You’ll need to fill an enormous repayment gap in the process. 

Finance directory sites, such as Instant Loan, allow you to compare financial products from numerous financial institutions.

Once you’ve made proper comparisons, thanks to your knowledge of the pros and cons of the Housing Development Board’s financial service and bank loans, you can confidently choose the financial institution that can help you choose the best product. This can include reasonable interest rates and workable amounts too.

Additionally, Instant Loan can update you about the latest discounts and promotional products that financial institutions provide nationwide. Visit our website today to find the best loan for all your needs.

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