Unless you’re a millionaire and can make an outright payment for your housing, most Singaporeans take out a loan to finance their new homes.

There are two primary options when it comes to financing your home with a loan – a HDB housing loan or bank loan.

If you are considering financing with a HDB loan, we have in this article all the information you need to know before you get started.

This includes your HDB loan eligibility, the famous HDB loan eligibility (HLE) letter, interest rates, and how to apply for a HDB loan.

HDB Loan Eligibility Conditions

Applying for an HDB loan is not as straightforward as applying for a bank loan. You’ll need to meet its eligibility conditions before you’re granted the loan.

The eligibility requirements for a HDB loan are categorised under citizenship, household status, income ceiling, ownership, and remaining lease.

The table below sums it up.

Eligibility Conditions 
CitizenshipAt least one buyer must be a Singapore citizen
Household StatusHave not taken two or more HDB loans
Have taken one HDB loan, and the last owned property is not a private residential property. This includes HDB properties acquired by gift, inheritance, or owned and disposed of through nominees
Income CeilingFor singles, $7,000 average monthly income when buying under the Single Singapore Citizen (SSC) Scheme

For a family, $14,000 average monthly income

For extended families, $21,000 average monthly income
OwnershipMust not have owned or disposed of any property within 30 months of applying for an HDB HLE letter

Must not own more than one market/hawker stall* property or commercial*/industrial property

*if you own a hawker stall/commercial property, you must be operating a business there and must not have any other source of income
Remaining LeaseThe loan amount you’ll be granted depends on the extent to which the remaining lease of the flat covers the youngest buyer up to 95 years

It’s important to be aware that if you don’t have a salary or income from stable employment, the HDB will apply what is known as a “haircut” to your income sources. This simply means they consider only 70% of your income during the loan application process.

HDB doesn’t consider the following as part of your monthly income sources:

  • Director’s fees
  • Claims/reimbursement/expenses
  • Bonuses
  • Dividend income or interest from deposit accounts
  • Income from ad-hoc overtime work
  • Overseas cost of living allowance
  • National Service allowance
  • Alimony or maintenance fees
  • Occupier’s income
  • Scholarship overseas allowance
  • Rental income
  • Pension

If you meet all the eligibility conditions above, the next step is to apply for the HDB Loan Eligibility (HLE) letter.

HLE Letter And Validity Period

The HDB loan eligibility letter is a document that indicates that you qualify for a particular HDB loan.

It shows the maximum HDB loan amount you are eligible for, interest rate, repayment period, flat type, flat lease, and other terms and conditions of the loan.

The HLE letter is valid for a six-month period from the date it was issued, provided there is no significant change to the applicant’s or family’s financial situation.

You can apply for a new HLE letter one week before the old one expires.

You’ll need an HLE letter when you want to:

  • Take out a HDB loan
  • Apply for a new HDB flat
  • Apply for transfer to ownership of a HDB flat
  • Obtain an option-to-purchase (OTP) to buy a resale flat

Credit Assessment Criteria

HDB also has a credit assessment criteria you need to meet apart from the above HDB loan eligibility conditions. This is because the HDB wants to only give flats to buyers that have a stable income and regular work.

The following income conditions for the HDB housing loan also apply.

Monthly CPF Contributions

You must:

  • Be in stable employment for at least three months if monthly income is fixed
  • Be in stable employment for at least six months if your monthly income varies.

Without Monthly CPF Contributions

You must:

  • Have a good credit score
  • Be in stable employment or trade for at least six months
  • Have bank statements that show a consistent cashflow for at least six months that can be used to repay the loan

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

To apply for a HDB housing loan, you’ll need to apply for an HLE letter first. The application for the home loan eligibility letter is done via the HDB InfoWeb, where you’ll need to submit some of your personal details including financial information.

There are two steps to applying for your HLE letter. They are:

  1. Prepare your documents
  2. Submit the application online

Prepare Your Documents

Depending on your employment type and CPF contributions, you’ll need the following documents.

a. An employee with CPF contributions 

  • Three months’ worth of recent payslips
  • CPF contribution history of latest 15 months

b. An employee without CPF contributions

  • Most recent six months’ payslips or letter from employer certifying job designation, commencement date, and six months’ salary before the application
  • Report from the Credit Bureau
  • Most recent six months’ passbook/bank statements

c. Self-employed individual

  • Report from the Credit Bureau
  • Latest six months’ bank statements
  • Annual statement of account that is certified by an auditing firm or the latest notice of assessment from the IRAS

d. Commission-based and part-time workers

  • Six months’ worth of payslips or commission statements
  • Most recent six months’ passbook/bank statements
  • CPF history for the latest 15 months
  • Report from the Credit Bureau

e. Odd job worker

  • IRAS Latest Notice of Assessment, or a letter from your employer that certifies job designation, date of commencement, salaries/commission for the latest six months
  • CPF history of the latest 15 months
  • Latest six months’ bank/passbook statements
  • Report from the Credit Bureau

f. Unemployed 

  • Proof of income for preceding months from last employer showing your monthly income and last work day
  • CPF history of last 15 months

Submit Your Application Online

Once you have prepared your documents, you can log in to the HDB portal to submit the application. Keep in mind that only applications with accurate and complete documents will be reviewed by the HDB.

It can take up to 14 days to receive feedback from the HDB on your application status. You can check the status of your HLE letter by logging in to the HDB portal with your NRIC and HLE reference number.

Factors That Determine How Much Housing Loan You Can Get

There are some factors that can determine the maximum HDB loan amount you can get. They include your:

  • Age
  • Loan-to-value (LTV) ratio
  • Mortgage Servicing Ratio (MSR)
  • Total Debt Servicing Ratio (TDSR)

Age

The older you are, the lower the amount you will get. This is because you’re closer to retirement age, which is the cut-off age for any HDB flat.

Loan-To-Value (LTV) Ratio

The LTV ratio is the maximum loan amount you can be given for a property. As of 22 Sep 2022, this is currently at 80% for a HDB loan.

The remaining 20% is the downpayment which you can finance with CPF, cash or a combination of both.

For instance, if the price of the home you want to acquire is $1,000,000, the maximum loan amount you will get is $800,000. The remaining $200,000 is the downpayment.

Mortgage Servicing Ratio (MSR)

The MSR applies to only HDB flats and executive condominiums (ECs). It denotes the percentage of your monthly income that is used to pay back mortgage debts. The maximum is 30%.

If the loan amount you’re applying for, plus your existing property loan repayment exceeds 30%, your new loan application will be rejected.

Alternatively, you can opt-in for a lower loan amount.

Total Debt Servicing Ratio (TDSR)

This refers to the part of your monthly income that is used to repay all your debt including property loans, credit card loans, student loans, etc, plus the new loan you’re applying for. To be able to get a new loan, your TDSR must be less than or equal to 55%.

Can You Use Your CPF?

You can use your CPF savings when paying for a new flat, or taking ownership of an existing flat.

The maximum amount you can use in your CPF depends on:

  • The extent to which the remaining lease of the flat covers the youngest buyer up to 95 years
  • The CPF housing loan limit for new flats and resale flats

You can use your CPF savings to pay for your downpayment and other fees such as stamp fees, registration fees, legal fees, and premiums for the CPF Home Protection Insurance (if applicable).

Be Clear About HDB Loan Eligibility Before You Apply

Checking your HDB loan eligibility is easy if you know the eligibility conditions. Once you meet the conditions, you can apply for an HDB HLE letter, which certifies your eligibility for a home loan.

The letter shows the maximum loan amount, and the other terms and conditions of the loan.

Besides the maximum loan amount, you still have to pay the downpayment for your HDB housing loan. If you’re short of funds, you can get a quick loan with U Credit at a low interest rate.

Simply contact us today to speak with one of our loan specialists to find out how it works, or apply for a loan online now.

Frequently Asked Questions

What Is The Interest Rate For HDB Loans?

The current interest rate for HDB loans is 2.6% per annum. This is currently pegged at 0.1% above the CPF Ordinary Account interest rate.

How Do I Pay For The HDB Downpayment?

As of 30 Sep 2022, you now have to pay 20% of the property value as the downpayment using CPF or cash. If your CPF OA does not have sufficient funds and you’re short on savings, you can apply for a bridging loan at U Credit.

How Long Does It Take To Get The HLE Letter?

Your HLE letter can take anywhere from two to three weeks to be sent to you.

What Is The Maximum HDB Loan I Can Borrow?

The maximum loan account is restricted to 80% of the property value. However, other factors such as your age, MSR and TDSR can also affect the loan amount.