Financing Guide
HDB Loan vs Bank Loan: Which Should You Take for Your Flat?
If you are eligible for an HDB concessionary loan, you can choose it or a bank loan. They differ on interest rate, repayment period, minimum cash, how CPF is used, and what it costs to leave. One choice is hard to undo: you can refinance an HDB loan to a bank, but you cannot refinance a bank loan to an HDB loan.
Side-by-side comparison
| HDB housing loan | Bank / financial institution loan | |
|---|---|---|
| Interest rate | Concessionary rate pegged at 0.1 percentage point above the CPF Ordinary Account rate, reviewed quarterly. HDB lists 2.60% a year for October to December 2026 | Set by each lender and changes with market conditions. Compare current packages on HDB's loan comparison tool |
| Who can take it | At least one applicant is a Singapore Citizen; household income ceiling $16,000 ($24,000 for extended families; $8,000 for singles under the Single Singapore Citizen scheme); no private property owned (or disposed of in the last 30 months); must pass HDB's credit assessment; not taken 2 or more HDB loans before | Any buyer who meets the bank's credit assessment and MAS rules |
| Maximum loan | Up to 75% of the lower of price or valuation (pro-rated if the lease does not cover the youngest applicant to age 95) | Up to 75% of the lower of price or valuation, subject to MAS rules (for example, lower limits if you already have housing loans, or if the tenure is long) |
| Loan period | Shortest of 25 years, 65 minus the average age of applicants, or remaining lease minus 20 years | Up to 30 years for an HDB flat; a lower loan limit applies if the tenure exceeds 25 years |
| Minimum cash | None, if your CPF Ordinary Account and the loan cover all payments | At least 5% of the lower of price or value must be paid in cash |
| Using your CPF OA | Each applicant may keep up to $20,000 in their OA; the rest must go into the flat before the loan is granted | You may use any amount of your OA, up to the CPF usage limits |
| Debt ratios | MSR up to 30% of monthly income; TDSR not applicable | MSR up to 30% and TDSR up to 55% |
| Early repayment | No fees | Fees may apply depending on the package, for example a lock-in period |
| Refinancing | You can refinance to a bank loan without penalty | You can refinance to another bank or package, subject to the lock-in terms. You cannot refinance to an HDB loan |
Based on HDB's "Credit to Finance a Flat Purchase" and housing loan pages and MAS's rules. HDB does not provide loans for Executive Condominium units bought from developers.
What the interest rate difference means in dollars
Bank rates move, so the right comparison is your own quote. To see how much a rate difference matters, here is the monthly instalment on a hypothetical $400,000 loan over 25 years at different interest rates. These rates are illustrations, not offers from any lender.
| Interest rate | Monthly instalment | Total interest over 25 years |
|---|---|---|
| 2.0% | $1,695 | $108,625 |
| 2.6% (the current HDB concessionary rate) | $1,815 | $144,403 |
| 3.0% | $1,897 | $169,054 |
| 3.5% | $2,002 | $200,748 |
| 4.0% | $2,111 | $233,404 |
Standard amortisation with a fixed rate for the whole term, rounded to the nearest dollar. Real bank loans usually have floating rates or rates that reset after a promotional period, so your instalment will move.
Two things the table cannot show: bank packages can be priced below or above the HDB rate over time, and the HDB rate itself follows the CPF Ordinary Account rate, so it also changes. Compare the full cost of each package including any lock-in, penalty and legal-fee subsidy conditions, not just the headline rate.
How each loan is assessed
HDB loan
HDB looks at your age, monthly income, job stability, existing loans and commitments, repayment records and monthly cash savings. You must be working when you apply for the HFE letter and when the loan is disbursed. Monthly instalments are capped at 30% of monthly income. When working out how much you can borrow, HDB uses the higher of its interest rate floor (currently 3.0%) and its prevailing loan rate, so the loan amount is calculated more conservatively than the actual rate. HDB states that its loan is disbursed at key collection.
Bank loan
Banks apply their own credit assessment on top of MAS rules: MSR for HDB flats, plus TDSR. See TDSR vs MSR and how much home loan you can get. MAS caps HDB bank loans at 30 years and applies a lower loan-to-value limit if the tenure goes beyond 25 years or if you already have housing loans. You also need a valid Letter of Offer from the bank before you exercise the option to purchase on a resale flat or sign the Agreement for Lease on a new flat.
Rules to know before choosing HDB
- A second HDB loan has conditions. To take a second HDB loan, you must first use the full CPF refund and part of the cash proceeds from selling your previous flat or private property towards the purchase. You may keep the higher of $25,000 or 50% of the cash proceeds. If you buy before selling, HDB charges a commercial interest rate until you sell within 6 months of completion and apply the refund and proceeds.
- You can only take another HDB loan after 30 months. Once an HDB loan is disbursed, everyone in the core family nucleus is treated as having taken it, and you cannot take another for 30 months from legal completion.
- The Home Protection Scheme is compulsory if you use CPF to pay the monthly instalments of either loan type, and HDB loans require HDB's fire insurance.
Rules to know before choosing a bank loan
- Lock-in periods and clawbacks. Early repayment or refinancing within the lock-in can cost you. Read the offer letter. See legal subsidy clawback.
- Refinancing rules. MAS caps a refinanced HDB loan at 30 years minus the years already run since the first disbursement. For an owner-occupied home there is no MSR or TDSR test on refinancing, but the bank's own credit assessment still applies.
- 5% cash is the floor. Your cash outlay can be higher depending on your age, tenure and any outstanding loans.
A simple way to decide
- Get your HFE letter first. It shows whether you are eligible for an HDB loan and for grants, and lets you request in-principle approvals from the participating banks at the same time.
- Compare the instalment from each option at the same loan amount and tenure, using realistic rates, and ask each bank for its Customer Information Sheet.
- Consider your cash buffer and CPF: the HDB route can need no cash if your OA and loan cover the price, while a bank loan needs at least 5% in cash.
- Think about flexibility: the HDB loan has no early repayment fee and you can move to a bank later; a bank loan cannot be moved back.
Run your own numbers with PropLeh's Maximum Loan Calculator, and see what your upfront cash looks like in the Purchase Calculator. If you are buying resale as a first-timer, check the HDB resale grants too, since grants reduce the loan you need.
FAQ
Is the HDB loan cheaper than a bank loan?
It depends on the period you compare. The HDB rate is set by formula (0.1 percentage point above the CPF Ordinary Account rate, reviewed quarterly) and bank rates vary by package and over time. Compare real quotes for the same loan amount and tenure.
Can I switch from a bank loan to an HDB loan later?
No. HDB says you cannot refinance a bank loan to an HDB housing loan. You can, however, refinance an HDB loan to a bank loan without penalty.
What is the maximum loan for an HDB flat?
Up to 75% of the lower of the purchase price or valuation, for both HDB and bank loans, subject to the conditions above. It is a ceiling, not a promise: your income, age and other commitments can reduce it.
Do I need to pay cash for the flat?
With a bank loan, at least 5% of the price or value must be paid in cash. With an HDB loan there is no minimum cash payment if your CPF Ordinary Account savings and the loan cover all payments.
Does TDSR apply to the HDB loan?
HDB's page says TDSR is not applicable to the HDB loan, but MSR of 30% of monthly income applies. Banks apply both MSR (for HDB flats) and a TDSR of 55%.
Can I get an HDB loan to buy an Executive Condominium from a developer?
No. HDB does not provide housing loans for EC units bought from developers; you would use a bank loan.
Figures current as of October 2026. The HDB concessionary rate is reviewed quarterly and bank packages change often, so confirm the current rates and terms with HDB and the lender. The instalment table uses hypothetical rates and is not a quote or a loan offer. This guide is general information only and is not financial advice; your eligibility and loan amount are decided by HDB or the lender.
Want to compare an HDB loan and a bank loan for a specific flat? Use PropLeh's Maximum Loan Calculator, or message us on WhatsApp.