HLE Documents

2021 Homebuyer’s Guide to HDB Loan Eligibility (HLE) Documents and How to Apply for Your Home Loan

Purchasing a home in Singapore comes with plenty of decision-making. Do you want to buy an HDB flat or a private property? If you opt for an HDB flat, should you take an HDB Concessionary Loan or an HDB bank loan?

Most Singaporeans prefer HDB Concessionary Loans over bank loans. This is primarily because HDB loans are consistent, unlike bank loans whose interest rates are fixed for only 2-3 years. Plus, with HDB loans, you don’t have to worry about prepayment penalties.

Thinking of financing your home with an HDB Concessionary Housing Loan? Here are the HDB Loan Eligibility criteria you need to know about.

 

How to Apply for HDB Concessionary Loan?

Step 1: Determine if You are Qualified for the HDB Loan Eligibility.

Just like any type of loan, you need to check your eligibility before proceeding with your application. That said, you and your family members must meet the following HDB Home Loan Eligibility (HLE) conditions:

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, their average income will be computed based on the actual number of months he/ she has worked.

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.

 

– A private residential property (local or overseas) will include:

Property acquired as a 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.

 

-Do not own more than 1 market/ hawker stall or commercial/ industrial property

If only 1 market/ hawker stall or commercial/ industrial property is owned, you must be operating the business there and have no other sources of income.

Remaining Lease The Remaining lease of the flat is >20 years + Covers the youngest buyer to age. HDB Housing Loan
≥ 95 years Allowed, subject to:

 

Loan-to-Value (LTV) limit* of 90%; and

Loan tenure is the shortest of:

25 years;

65 years minus the average age of the buyers; or

Remaining lease at the point of flat application** minus 20 years

< 95 years Allowed, subject to:

 

LTV limit of 90% is pro-rated based on the extent that the remaining lease can cover the youngest buyer to the age of 95; and

Loan tenure is the shortest of:

25 years;

65 years minus the average age of the buyers; or

Remaining lease at the point of flat application+ minus 20 years

 

As you can see from the table above, HDB loan eligibility has certain restrictions. To sum it up, you can only apply for an HDB concessionary housing loan if you’re buying an HDB flat. Additionally, you must be a Singapore citizen with a monthly income cap of S$14,000 for families (or S$21,000 for extended families).

Confused about whether you fit the criteria? You can go to HDB | Eligibility Check to determine whether you meet the conditions to buy a new or resale flat.

 

Step 2: Satisfy the HDB Credit Assessment Criteria

You need to understand how HDB assesses your application. In doing so, you’ll have a higher chance of approval. So aside from getting a preliminary assessment of your eligibility, you must also determine whether you meet HDB’s credit assessment criteria.

Take a look at the illustration:

Credit Assessment HLE

 Image source: HDB official website

 

Step 3: Secure an HLE Letter

Before proceeding with your application, make sure that you secure an HDB Loan Eligibility Letter (HLE). You must secure an HLE letter before your first appointment to book a flat or before signing the Option to Purchase (for resale flat buyers).

A Loan Eligibility Letter (HLE) is an in-principle proof that you qualify for an HDB concessionary loan. This means that you have received approval that HDB will grant you a loan.

Your Loan Eligibility (HLE) Letter will state the following:

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

The HLE letter is valid for six months from the date of issue. That said, you don’t need to be re-assessed during this period. However, there must be no changes in your financial position or family members.

You may apply for a valid HDB Loan Eligibility Letter (HLE) here.

 

Step 4: Complete the Application by Uploading the Necessary HLE Documents

To secure an HDB Loan Eligibility (HLE) Letter, you need to provide the necessary documents. Remember, if the documents are incomplete, your HLE application will not be processed. You can submit the complete documents here.

If you want the complete income guidelines and list of documents, visit the HDB website. For a quick reference, check out this list:

  • 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

 

Step 5: Check Your HDB Loan Eligibility (HLE) Status

When you’ve completed your application for an HDB Eligibility Letter (HLE), you will receive an HDB HLE number. To check your HLE letter application status, you can visit HDB’s website. Log in with your NRIC and HLE reference number.

 

How Much Loan Amount Can I Get?

With HDB loans, the flat buyer needs to pay a minimum downpayment of 10%. You can pay for your downpayment using your CPF contributions, provided that you have enough savings in your Ordinary Account.

That said, the maximum LTV for an HDB loan is 90%. However, other factors will determine the maximum amount you can borrow:

  • Loan To Value Limit (LTV): This is the maximum loan amount you can borrow for a particular property. It is expressed as a percentage of the total market value of the property. For HDB loans, LTV is up to 90%.
  • Mortgage Servicing Ratio (MSR): This is a portion of your gross monthly income that goes towards repaying your property loans, including the loan you’re applying for. It is capped at 30% of your monthly income. MSR is only applicable to housing loans for HDB flats and executive condominiums.
  • Total Debt Serving Ratio (TDSR): This refers to the portion of your monthly income that goes towards your monthly debt obligations. This includes all debt, including credit card bills, car loans, and other property loans, including the one you’re applying for. Your TDSR must be less than or equal to 60%. Click here to find out how to calculate your TDSR. 

 

Frequently Asked Questions

1. What is the HDB Loan Interest Rate?

When you take an HDB loan, you’ll enjoy a concessionary interest rate. Currently, the concessionary rate is pegged at 0.1% above the prevailing CPF rate, totaling 2.6%.

Considering that most bank loans do not exceed 2% in the last 10 years, the HDB loan interest rate may seem high. However, it is worth noting that HDB loan interest rates are much more consistent than bank loans. This stability makes it attractive to home buyers.

You can check the most up-to-date HDB loan interest rates on the HDB website.

 

2. When Do I Need To Apply For A New HLE Letter?

As previously mentioned, the HLE Letter is valid for six months from the date of issue. You will need to re-apply for a new HLE Letter if:

  • Any of the information provided is untrue or incorrect
  • There are any changes in your household income, family members, or other circumstances that may affect your HDB loan eligibility.
  • You and your family members listed in the application failed to comply with any of the terms and conditions to buy a flat and/or take an HDB housing loan.
  • There are any changes in HDB policies that may affect your eligibility to take an HDB housing loan.

 

Conclusion

Key Takeaways:

  • When buying an HDB flat, you can take an HDB Concessionary Loan or an HDB Bank Loan.
  • To apply for an HDB housing loan, you need to meet certain HDB Loan Eligibility (HLE) conditions.
  • Before proceeding with your application, make sure to satisfy the HDB credit assessment criteria and secure an HDB Loan Eligibility Letter (HLE).

An HDB housing loan is a good option if you prefer consistency and stability in loan repayments. Plus, it’s also worth considering if there’s a chance that you can pay off the loan early since it doesn’t have early repayment fees.

But to find the best loan options, take your time to compare interest rates, loan amounts, and loan tenure. Use a loan comparison tool, like Instant Loan, to make an informed choice. Instant Loan will help you find the most suitable terms and conditions that suit your needs. Send us a request today. 

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