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What is a HDB Home Loan?

Understanding HDB home loan can be tricky without proper guidance. Here’s a guide to help you understand HDB home loans and how it works.

HDB home loan is a home loan with concessionary interest rate that is offered by the Housing & Development Board of Singapore. However, it is only available to eligible flat buyers that are subject to the HDB credit assessment and existing HDB mortgage criterion.

HDB requires all potential home buyers to acquire a HDB Loan Eligibility (HLE) letter before they apply for a HDB loan. It is also strongly encouraged one to have a HLE letter before he/she even started searching for a flat.

What is a HLE letter & What is it for?

A HDB Loan Eligibility (HLE) letter is a financial tool that indicates the maximum loan amount that one is eligible for. However, the final loan amount is still subject to HDB’s prevailing conditions governing the granting of loans.

The HLE letter will tell you if you are eligible for a HDB loan. This is a prerequisite for one to have before he/she proceeds to apply for a HDB loan. Assuming one is eligible for the HDB loan, his/her HLE letter will tell him/her about:

  • (a) the maximum loan amount that he/she can get;
  • (b) the maximum monthly instalments to pay;
  • (c) the maximum repayment period;
  • (d) the amount of cash to be used for the next flat purchase
So, How Do I Know If I’m Eligible?

  • At least one of the buyers has to be Singapore citizen
  • Average gross monthly household income not more than:
    + S$10,000 for families
    + S$15,000 for extended families
    + S$5,000 for singles purchasing a 5-room or smaller resale flat, or a 2-room new flat in non-mature estate
  • Have not taken more than two HDB loans
  • Do not own any private residential property
  • Have not disposed any private residential property in the previous 30 months before applying for a HLE letter
  • Have taken one HDB loan and have not previously owned a private residential property
  • Do not own more than one market/hawker stall or commercial/industrial property
Interest Rates of HDB Home Loan

The HDB concessionary interest rate is pegged at 0.1% point above above interest rate of CPF ordinary account. It’ll be revised quarterly along with the revision of CPF interest rates.

The Repayment of HDB Loan

Instalment of HDB loan is payable on every first day of the month. A late payment charge will be imposed if the payment is not received within the month. Flat buyers are able to pay with CPF savings if they do not wish to service the loan with cash.

Important Stuff to Note

Maximum Loan Quantum is dependent on:-

  • Maximum repayment period: The shorter of 25 years or 65 years minus the buyer’s age
  • Applicable interest rate: It will be based on the prevailing interest rate which will be revised from time to time
  • Monthly instalments: Capped at 30% of the monthly gross income
  • Loan ceiling:
    + 90% of the purchase price for direct purchase flats
    + The lower of 90% of resale value or market price for resale flats

Every HDB loan borrowers are required to take up the following insurance:

  • HDB Fire Insurance Policy
  • Home Protection Scheme
How to Use HDB Home Loan Calculator and iMoney?

iMoney doesn’t just provide a comprehensive comparison of the HDB home loans available in the market, but also a home loan calculator to help you to plan ahead. This calculator allows you to find the amount of your monthly payments as well as the total sum. This calculator gives useful information that can guide you to make future adjustments in your budget so that you may accommodate your monthly repayment installment with a smooth cash flow.

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