Owning a home in Singapore can be a nightmare, especially when you don’t have the lump sum needed to pay for the property upfront. 

While banks offer mortgages, sometimes bank loans may not be the best option because of their fluctuating interest rates. 

A HDB housing loan can help the average Singaporean buy a flat and receive up to 85% financing from the flat’s value. 

In addition, the interest rate is low, and gives you sufficient time to repay. You only need to qualify for HDB loan eligibility. 

Here is a breakdown of everything you need to know about getting an HDB loan.

Eligibility Conditions

While most financial institutions require a high credit score to offer home loans, a HDB home loan has specific conditions you must meet before you can get a mortgage loan. 

Here are the most critical conditions you must fulfil for a HDB housing loan.

You Must Be A Singaporean

The Ministry of National Development in Singapore established the Housing & Development Board (HBD) to simplify home ownership for its citizens. 

Therefore, you must be a Singaporean to be eligible for a home loan. If you are applying for a HDB loan as a couple or extended family, at least one buyer must be a Singaporean.

Applicant’s Gross Monthly Income Should Be Within The Income Caps 

The income ceiling for HDB loans varies depending on the applicant, whether single or otherwise. 

If you are applying for a HDB housing loan as a single, your gross monthly income must be below $7,000. 

For couples, the gross monthly income must be less than $14,000, while extended families should have a maximum of $21,000.

You Must Be At Least 35 Years Old When Applying As A Single 

If you want to apply for a HDB housing loan as a single, you should be at least 35 years old to be eligible for an HDB loan. 

You can apply for a five-room flat, whether new or resale. Alternatively, you can opt for a two-room apartment with a 99-year lease in a newly developed estate.

All Applicants And Household Occupiers Must Not Have Taken More Than One Housing Loan From HDB

Suppose you apply for a HDB loan as a couple or extended family. 

In that case, all the applicants and household occupiers must not have previously taken more than two HDB housing loans.

If any applicants or household occupiers had previously taken a HDB loan, the residential property should not be local or privately owned abroad. 

The private property could be one you acquired either by purchase, as a gift, as an inheritance, or by disposal from nominees.

All Household Occupiers And Applicants Can’t Have A Local Or Private Residential Property Abroad

To be eligible for a HDB loan, applicants and household occupiers must not have a private residential property abroad or show interest in owning such properties at the time of application.

You Must Not Have Disposed Of A Private Property In The Last 30 Months

If you had had a private property either locally or abroad, you must have yet to dispose of it 30 months from getting a HDB house loan. 

Credit Assessment Criteria

The HDB uses credit assessment criteria to determine your income flow and stability, and affirm your ability to repay a HDB home loan. 

If you have a stable income, you are likely to pass the credit assessment regardless of your type of employment. 

CPF contributions can also be included in the credit assessment criteria, although it’s not a compulsory requirement. 

To pass the credit assessment criteria, you must have a: 

• Continuous income for at least six months if you have no CPF contributions
• Stable income for at least three months with a fixed salary if you have a monthly CPF contribution
• Steady income for at least six months if your wage is inconsistent with CPF contributions
• Good credit score if you have variable income but no CPF contribution

HLE Letter And Validity Period

If you have met the eligibility conditions and passed the credit assessment criteria, you can apply for a HDB home loan. 

An HDB loan eligibility (HLE) letter confirms your loan eligibility and states the maximum HDB loan awarded to you.

The HLE letter is the crucial document you need before you can purchase your flat through a HDB housing loan.

Other than stating the eligible loan amount, an HDB HLE letter also includes information such as the: 

• Terms and conditions
•  Repayment period
•  Interest rate
•   Number of proceeds obtained by selling your previous flat

Apply for an HLE letter at the HDB website. You will also need to submit several documents to the HDB portal before it can decide the amount to award you. 

Depending on your employment status, the documents you should prepare include your payslip, credit bureau report, bank statements, and CPF contribution history. 

Counter-check the documents needed for your employment type and upload them to the HDB portal. 

The HLE letter will be valid only for six months from the time of issuance. 

However, you can reapply for the HDB HLE letter a week before its expiry date in case you haven’t used it since it was issued.

Factors That Determine How Much Housing Loan You Can Get

The HDB gives different loan amounts to applicants. It uses age, income level, and outstanding credit to determine the maximum housing loan to award.

Age

Young people are likely to get higher amounts than seniors since they have more years to repay the loan before they reach retirement age. 

Meanwhile, seniors are likely to get lower payments since they are almost retiring.

Income Level

While the HDB requires the applicant to be of a specific income range to be eligible for a housing loan, it still uses your gross monthly income to decide how much it can give you. 

In general, the HDB uses your income level as a gauge to ensure it doesn’t award you an amount you may not pay back promptly. 

So the higher your income, the more you can get.

Outstanding Credit

If you have many pending debts such as car loans, student loans, or credit card bills, the HDB is likely to grant you a lower amount than an applicant with fewer or no debts.

How, Where, And When To Apply For A HDB Housing Loan

The HDB housing loan is the most appropriate for individuals, couples, or extended families with lower monthly incomes between $7,000 to $21,000. 

Otherwise, the HDB recommends that applicants get a bank loan.

You can get an HDB housing loan before booking your new flat or signing your option-to-purchase (OTP) in case of resale. 

You may also need a HDB housing loan when you want to acquire an existing apartment.

To get a HDB housing loan, you need an HLE letter, which you must apply for from the HDB website. 

Ensure you have Singpass as a single, or that you and your spouse each have Singpass when getting the loan. You should also have valid supporting documents saved as PDF or JPG.

Here’s a step-by-step process on applying for an HDB HEL letter and getting approved for a HDB housing loan.

1.   Visit the HDB housing loan website. The link opens the HDB panel, where you will log in to your HDB portal. You must have a Singpass ID and password for your HDB account to log in.
2.   Fill up the details required, such as your employment status, outstanding debts, and income.
3.   Verify your application by authenticating your Singpass, that of your spouse, and all the applicants.
4.   Upload images of the required documents.
5.   After a successful application, the HDB will send you an HDB HLE reference number.
6.   HDB will review your application and respond within 14 days after your application.

Can You Use Your CPF?

A HDB housing loan allows you to use part of your CPF savings in your Ordinary Account (OA) to finance your housing needs. 

When buying a flat or taking over ownership under HDB loans, you must retain up to $20,000 in your CPA OA account. 

You may use the remaining amount to top up your loan repayment in installments or use the cash as a downpayment for your flat. 

While you can also use your CPA OA savings to finance your home with financial institutions, it’s risky to do so because of unforeseen circumstances that can render you helpless if you use all your CPF savings. 

So instead, HDB requires you to keep up to $20,000 in your CPF OA savings to cater to unforeseen financial constraints.

For couples, the HDB requires each party to save up to $20,000 in their accounts when applying. 

With $20,000 saved in each of your accounts, you can use the amount remaining to pay for the new flat or take over ownership of a flat during a resale. 

Furthermore, you can use the balance to pay for legal and stamp fees if you opt for insurance for the apartment during purchase.

However, HDB releases the loan awarded after the surplus amount that remained after keeping $20,000 in your CPA OA savings has been depleted. 

After which, you will need to pay for the outstanding home loan balance in cash or installments.

Get Your HDB Housing Loan Today

You are on your way to becoming a flat owner today when you apply for a mortgage from HDB. 

You only need to fulfil the criteria for HDB loan eligibility and get an HDB HLE. 

If you may need any financial help from a lender, licensed money lender Horison Credit is ready to assist you.

Contact us today and apply for a loan today.