Should You Get A Bank Loan For Your HDB Flat?

Planning to buy an HDB flat? Probably, you might be considering taking out a bank loan to finance it.

But bank loan for HDB really worth it? Or should you go for an HDB loan?

There may be a lot of questions like this going on in your mind before taking a big decision like buying an HDB flat. But we have got you covered.

Read on to know everything about taking a bank loan for HDB, and which is better – a bank loan or HDB loan for buying a HDB flat.

What To Know About A HDB Loan

The Housing & Development Board (HDB) offers housing loans to Singapore citizens and permanent residents who wish to purchase an HDB flat.

The interest rate for an HDB loan is pegged to the prevailing CPF interest rate, which is currently at 2.6% per annum. The interest rate is reviewed every quarter and HDB will announce the new rates about a month before the next quarter starts.

With a HDB loan, you can enjoy:

  • Concessionary interest rates
  • Up to 80% of the property value
  • Loan tenure of up to 25 years

Key Differences Between A HDB Loan And Bank Loan

HDB loans and bank loans differ in various ways. The main differences between the two are:

Loan Quantum

You can borrow up to 80% of the property value with a HDB loan, whereas with a bank loan, you can borrow up to 75% of the property value.

Previously, HDB loans used to cover up to 90% of the property value, but this was reduced to 85%, then 80% recently to discourage overleveraging.

Loan Tenure

The maximum loan tenure for an HDB loan is 25 years, while the maximum tenure for a bank loan is 30 years.

However, do note that the maximum tenure for both loans will be capped at 65 years of age, whichever is earlier.

Upfront Cash Required

The minimum HDB loan downpayment is 20% of the property purchase price. This can either be paid in full using CPF ordinary account or cash or both, depending on your preference.

On the other hand, if you are taking a bank loan, you will need to pay at least 25% of the purchase price as a downpayment. Out of this, at least 5% should be paid in cash and the remaining 20% can be paid in cash or with CPF savings.

This is quite difficult in some cases compared to HDB bank loan downpayment.

Interest Rates

Bank loans’ interest rate changes according to the market changes. However, the bank loan interest rate is mostly lower than that of the interest rate for HDB loans which is fixed at 0.1% above the current OA interest rate. Currently, it is 2.6%.

Lock-In Period

There is usually a two or three-year lock-in period for bank loans, while there is no such lock-in period for HDB loans. This means with HDB loans you are free to refinance your home loan to a bank or pay it off earlier at any time with no penalties.

However, when you want to pay off a bank loan earlier or want to refinance it with another bank, you may need to pay a penalty, which is usually 1.5% of the loan amount.

Pros And Cons Of A HDB Loan And Bank Loan

As seen with the key difference between HDB loan vs bank loan, it is clear that both have their own pros and cons. Here are a few to be highlighted:

Pros Of A HDB Loan

  • Can borrow more than bank loans up to 80% of purchase price
  • Downpayment is less (20%) and can be paid with CPF or cash
  • No minimum loan amount
  • No lock-in period so can clear the debt whenever you have the money to do so
  • No penalty for early repayment
  • Late repayment fees are not severe

Cons Of A HDB Loan

  • The interest rate for HDB loan is generally higher than a bank loan
  • Not for those who own a private residence in Singapore
  • There are many eligibility restrictions

Pros Of A Bank Loan

  • The interest rate is quite low
  • Not much restriction on the income range or financial status
  • Eligibility requirements are quite easy

Cons Of A Bank Loan

  • The interest rate is not fixed but fluctuates based on market change
  • Has a lock-in period – so early repayment will have a penalty
  • Downpayment is more than HDB loans (25%), and 5% of it must be paid in cash
  • Only 75% of the purchase price can be gotten as a loan

Eligibility Criteria For HDB Loan Vs Bank Loan

HDB Loan Eligibility Criteria

Out of both, HDB loans have more stringent eligibility requirements. Here are the most important points from the HDB loan eligibility criteria.

  • At least one of the buyers should be a citizen of Singapore
  • Should not have taken two or more HDB loans previously
  • Senior citizens above 55 years of age can’t apply for short lease two-room flexi flat or community care apartment
  • Singles at least 35 years of age can apply for a HDB loan for a two-room flexi flat on a 99-year lease or a five-room or smaller resale flat
  • The average monthly household income should not be more than $14,000 for families, $21,000 for extended families, and $7,000 for singles
  • Should not own any private residential property in Singapore or abroad
  • Have only one or no market stall or commercial property – if so, it should be the only source of income
  • Must not have disposed of any private residential property in the last 30 months

Bank Loan Eligibility Criteria

When you want to take a bank loan for HDB flat, the eligibility requirements are decided by the bank you choose, which are mostly less stringent than HDB.

As long as you have the decent financial stability to pay off the loan and hold a good credit history, you are likely to be eligible for the bank loan.

Of course, there may be certain other conditions like having a steady income, being at least 21 years old, or not holding any other outstanding loans that may vary between banks.

Why The TDSR And MSR Matter

When you are taking any kind of loan whether it is a HDB loan or bank loan, it is important to know about TDSR (Total Debt Servicing Ratio) and MSR (Mortgage Servicing Ratio).


TDSR is the maximum amount of debt that you are allowed to service every month and is currently set at 55%, which was previously 60%. This means your monthly loan repayments, credit card bills, and other debts should not exceed 55% of your monthly income.

This poses restrictions on all your liabilities making it difficult for you to take a housing loan if you already have many other debts to repay.

Depending on the existing debts, you may have to first clear some of them or loan less if possible.


The MSR refers to the proportion of your monthly take-home that you use to pay for mortgage costs. The monthly payment on your HDB or EC loans cannot exceed 30% of your gross income.

So, if you are planning to get an HDB loan or bank loan, you will be restricted by TDSR and MSR. With TDSR, the maximum bank loan for HDB will be depending on your other loans and credit facilities. With MSR, you cannot exceed the 30% limit.

Should You Get A Bank Loan For HDB?

With rising interest rates and the TDSR framework in place, choosing between the HDB loan and the bank loan can be a tough choice for Singaporeans.

Evaluating your personal needs and financial situation is the best way to decide whether an HDB loan or bank loan makes more sense for you.

Some key factors that you should consider include the amount of downpayment, your eligibility for each type of loan, and the interest rates.

HDB loans are typically more attractive because of the lower interest rates and higher loan quantum. However, you may not be eligible for an HDB loan if you already own a property or do not meet the strict eligibility criteria.

Bank loans, on the other hand, have higher interest rates but may be more flexible in terms of eligibility. You should also consider the TDSR and MSR framework when deciding which type of loan to take.

Now that you know all about HDB loans and bank loans, you can make an informed decision about which type of loan is best for you.

Looking for more options for getting a bank loan for HDB flats? Horison Credit, one of Singapore’s most trusted licensed money lenders, can help you out.

And because we understand that everyone’s needs are different, we offer flexible repayment plans that fit your budget.

Contact us now or apply for a loan with us today.



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