Now that you have applied to buy a HDB flat, you’re about to reach another milestone in life. The key question is whether you want to take a bank loan or a HDB loan.

But you’re daunted by what you’ve heard from others regarding the tedious paperwork that getting a bank loan for HDB involves. 

Yet banks offer lower interest rates than HDB, but require a higher downpayment.

You’ve come to the right place. In this article, we’ll tell you how you can apply for a bank loan for HDB, and the differences between a bank loan and HDB loan. 

So read on to find out. 

What To Know About A HDB Loan

Selecting a loan for your property often comes down to two options: a bank loan or HDB loan.

HDB provides a housing loan at a reduced rate to qualifying flat buyers, whether they are single or with a family. The interest rate of a HDB loan is currently 2.6% per annum.

If you choose to take an HDB loan for your flat, you need to consider the following:

  • Criteria
  • Process
  • Eligibility 
  • Documents

Flat buyers who are qualified for a HDB loan must submit a HDB loan eligibility (HLE) letter, a document indicating their loan eligibility. It will include the following information:

  • Loan amount eligible
  • Monthly repayment amount
  • Loan tenure
  • Terms and conditions

Before committing to a flat purchase, all potential homeowners who intend to get a HDB loan must first acquire an HLE letter. 

Applicants who reserve an apartment without a valid HLE letter will be ineligible for a HDB loan in the future. 

If you are applying for a HDB flat for the first time, you must ensure the following requirements are complied with:

  • At least one buyer must be a citizen of Singapore
  • You have not previously obtained two or more HDB loans
  • You have applied for a HDB housing loan
  • Your most recent asset is not private residential property – local or overseas

Should You Get A Bank Loan Or HDB Loan?

Singaporeans can get a bank loan or a HDB concessionary loan, popularly known as an HDB loan. 

Those who want to buy a HDB flat but do not have enough money in their bank to cover the cost of the property will have to take out a loan.

There are many reasons a HDB loan is better than a bank loan for HDB. Some of those include:

Interest Rate

The interest rates of bank loans may fluctuate according to market conditions if you opt for floating interest rates. Even fixed interest rates will change after two to three years.

In contrast, the interest rate of an HDB loan is currently pegged at 2.6% per annum, or 0.1% above the prevailing interest rate of your CPF Ordinary Account (OA). 

If you want to pay less interest so you can have more savings for retirement, a bank loan ‌has a lower interest rate than a HDB loan. 

However, remember to monitor refinancing options to get the best possible interest rates. 


A HDB loan downpayment comprises 20% of the buying price of a property. 

You can pay for the flat from your OA savings before you are granted a housing loan for the remaining amount. 

You can pay for the downpayment in full with your OA savings, cash, or both.

With HDB, you can choose to leave up to $20,000 in your OA for future use. Not only will the savings attract interest, but you can use them to pay for your monthly installments if and when the need arises.

Lock-In Period

There is no lock-in period for HDB loans. Hence, there is no penalty if you settle your housing loan early. This means you can refinance your loan with a bank anytime if you find a lower interest rate. 

However, you cannot switch back to a loan with HDB once you have refinanced your HDB loan with a bank.

Key Differences Between A HDB Loan And Bank Loan

Here are the major differences between a HDB loan, and a bank loan for HDB:

  • There’s a minimum down payment of 20% for a HDB loan. You can pay your downpayment fully using CPF, as long as you have enough savings in your OA.
  • While you can take a bank loan for HDB flats and private properties, a HDB loan is given for HDB flats only.
  • If you get a bank loan, the downpayment is 25%, of which 5% has to be in cash. This means you must prepare about $15,000 for even a moderately sized property.
  • You can borrow up to 80% of the property value for HDB, and 75% with a bank loan.
  • The maximum loan tenure of a HDB is 25 years, and 30 years for a bank loan.

Pros and Cons Of A HDB Loan And Bank Loan

  • HDB has rigid eligibility criteria, which we will cover later. 
  • A bank loan usually has fewer limitations than a HDB loan since the bank wants to do a credit check. However, bank loan interest rates change. Therefore, a bank loan might be better or worse than a HDB loan of 2.6%, depending on the current SIBOR/SOR rates. 
  • Bank loans have a lower loan-to-value (LTV) ratio, which means you borrow less but pay more upfront. 
  • Previously, a HDB housing loan could cover up to 90% of the purchase price for new flats, as well as the lesser of the selling price or market value for resale flats. However, as part of the new Singapore property measures implemented in Dec 2021, the LTV for HDB-granted loans was reduced to 80%, lowering the maximum amount future purchasers may borrow from HDB. In Sep 2022, this was lowered to 80%. 
  • However, a HDB loan allows you to pay the 20% downpayment using your OA savings, cash, or both. 

Eligibility Criteria For A HDB Loan

If you are purchasing a HDB in Singapore and your spouse is a Singaporean, you can apply for a HDB housing loan. 

To qualify, your income must be less than the maximum household income limit, and you must not own any private or commercial property. 

What Is The Interest Rate On HDB Home Loans? 

The current interest rate on HDB home loans stands at 2.6%. It might potentially change if the OA interest rate is revised.

To qualify for a HDB loan, the law requires that:

  • You should be a Singaporean. 
  • You should be 21 years old and above.
  • You should have a gross monthly income of not more than $7,000 if you are single, 

$14,000 for families, and $21,000 for extended families.

  • You must not have owned a residential property in the previous 30 months before applying for a HDB loan.
  • You have only one market/stall/commercial/industrial property.
  • You must work in the stall/commercial, operating market, or industrial facility that you own, and it must be your only source of income.

Eligibility Criteria For A Bank Loan

When it comes to a bank loan for HDB, the qualifying conditions are less severe than that of HDB’s. 

Each bank has its method of evaluating applicants, but in general, as long as your finances are excellent and you have a solid credit score, you should be fine.

Why The TDSR And MSR Matter

The Total Debt Servicing Ratio (TDSR) and Mortgage Servicing Ratio (MSR) limits will apply whether the loan is a HDB or bank loan. 

These guidelines are put in place by the government to prevent Singaporeans from borrowing more than they can afford. 

Mortgage Servicing Ratio

If you buy a HDB flat, you will be limited by the MSR. It specifies that monthly mortgage repayments cannot exceed 30% of a borrower’s and/or joint borrower’s monthly income.

Total Debt Servicing Ratio 

The TDSR applies to all of your liabilities, not just your mortgages. This means you may be unable to obtain a home loan if you are currently servicing numerous debts, or may have to loan less.

The current TDSR is 55%. This means your monthly repayments for all debts cannot exceed 55% of your monthly income.

Decide If You Can Manage A Bank Loan For HDB

In light of the considerations, you might want to consider a HDB loan instead of a bank loan for HDB. Accessing your CPF savings could give you a wider range of property options.

If you need help, get in touch with Credit 21. We are a legitimate and highly respected licensed money lender. 

Many face financial challenges and cannot obtain loans because of stringent borrowing rules, poor credit history, and lengthy approval procedures. 

At Credit 21, we assure you of a smooth process. Our repayment arrangements and interest rates adhere to the Moneylenders Act. 

We offer some of the most affordable interest rates and no hidden fees. Reach out to us now or apply for a loan today.