Bank Loan for an HDB Resale Flat: Limits, Cash and Timeline

A bank loan for an HDB resale flat can reach 75% of the lower of price or valuation, with at least 5% of the price paid in cash. Push the tenure past 25 years and both figures change: the ceiling falls to 55% and the minimum cash doubles to 10%.

That 25-year threshold applies to HDB flats alone, and it is where most bank loan plans for a resale flat go wrong. Two income tests then sit on top of it, both computed at an assumed rate of 4% a year.

What a bank will lend on a resale flat

Loan-to-value (LTV) is the loan as a percentage of the property’s value. The Monetary Authority of Singapore (MAS) sets these limits for residential property loans where the Option to Purchase (OTP) is granted on or after 6 July 2018:

Outstanding housing loans	LTV limit	Minimum cash downpayment
None	75% or 55%	5% at 75% LTV, 10% at 55% LTV
1	45% or 25%	25%
2 or more	35% or 15%	25%

The bank applies the limit to the lower of the resale price or its own valuation. Any amount you agree above valuation, often called Cash Over Valuation, sits outside that base and needs cash.

Eligible CPF Ordinary Account (OA) savings can cover the equity beyond the mandatory cash portion, subject to CPF housing rules and the flat’s remaining lease.

The 25-year tenure threshold is specific to HDB flats

MAS caps housing loan tenure at 30 years for HDB flats, against 35 years for private property. The lower LTV limit applies if the tenure exceeds 25 years for an HDB flat, or the loan period extends beyond the borrower’s age of 65.

A private property borrower keeps the 75% ceiling up to a 30-year tenure. On a flat, the same 30-year tenure drops the ceiling to 55%.

On a $650,000 resale flat:

Item	25-year tenure, 75% LTV	30-year tenure, 55% LTV
Maximum loan	$487,500	$357,500
Downpayment	$162,500	$292,500
Of which minimum cash	$32,500	$65,000
Monthly instalment at 3.0%	$2,312	$1,507

The 30-year route lowers the monthly commitment by about $805 and needs $130,000 more equity at completion. It suits a household holding substantial CPF OA savings and wanting a lower monthly outgo. It does not suit a buyer who is already stretched on cash, which describes most upgraders funding a renovation in the same year.

For joint applications, MAS requires banks to use the income-weighted average age rather than the older applicant’s age, so a higher-earning younger borrower lengthens the tenure available at 75%.

Both MSR and TDSR apply, and both assume 4%

Two ratios govern a bank loan on a flat, and the loan must clear both.

The Mortgage Servicing Ratio (MSR) caps repayments on property loans at 30% of gross monthly income. It applies to loans for HDB flats and for executive condominiums where the minimum occupation period has not expired.

The Total Debt Servicing Ratio (TDSR) caps all monthly debt repayments at 55% of gross monthly income, counting car loans, personal loans, credit card minimums and other mortgages.

When computing the instalment for either test, banks must use the higher of the package rate after any promotional period and a medium-term interest rate floor. That floor has been 4% a year for residential property loans since September 2022.

On a $487,500 loan over 25 years:

Basis	Assumed rate	Monthly instalment
MSR and TDSR assessment	4.00% floor	$2,573
A package charging 3.0%	3.00%	$2,312

At the 30% MSR cap, the $2,573 assessed instalment needs gross monthly income of about $8,577. MSR binds before TDSR for most flat buyers, because 30% is the tighter of the two ceilings unless you carry heavy non-property debt.

Our TDSR and MSR guide sets out how each existing commitment enters the calculation.

What the cash adds up to at $650,000

Assume a $650,000 flat, a matching valuation, a 75% loan over 25 years and no Cash Over Valuation.

Item	Amount	Funding
Purchase price	$650,000
Bank loan	$487,500	Disbursed at completion
Minimum cash downpayment	$32,500	Cash only
Balance of downpayment	$130,000	Cash or eligible CPF OA
Buyer’s Stamp Duty	$14,100	Cash or eligible CPF OA
Option and exercise fees	Up to $5,000	Cash, within the downpayment

Buyer’s Stamp Duty is calculated on the higher of price or market value under the bands applying from 15 February 2023. Legal fees, the valuation fee and the resale application fee sit outside this table, and our HDB resale buyer fees guide lists them.

A valuation below the agreed price raises the cash requirement twice over. It lowers the 75% base and adds the price gap, neither of which CPF can fund.

You still need an HFE letter, and the option clock is short

The HDB Flat Eligibility (HFE) letter confirms your eligibility to buy a resale flat and to receive grants. HDB requires a valid HFE letter before a seller grants you the OTP, whether you intend to borrow from HDB or from a bank.

A bank-financed purchase adds four more dependencies inside the same window:

1. A valid HFE letter before the seller grants the OTP.
2. An In-Principle Approval (IPA) stating what the bank will lend, ideally before you settle the price.
3. A valuation the bank accepts.
4. A signed Letter of Offer before you exercise the OTP.

The standard HDB option period is 21 calendar days. A buyer who starts comparing banks after receiving the OTP leaves the valuer, the bank’s credit team and the solicitor very little room, and the option fee is at risk if the loan is not in place. Our HFE letter guide covers the processing time and validity, and the HDB resale timeline puts the deadlines in order.

A bank loan also requires a private solicitor rather than HDB’s legal service. Include that quote, and any clawback attached to a legal subsidy, when comparing packages.

The switch to a bank loan runs one way

Once a bank loan finances a flat, that mortgage cannot be refinanced into an HDB housing loan. An eligible owner holding an HDB loan can refinance to a bank, but cannot move back for that flat.

HDB pegs its concessionary rate at 0.1 percentage point above the prevailing CPF OA interest rate and reviews it each quarter, which produces a rate that moves rarely and in small steps. HDB publishes 2.6% a year for the current quarter. A bank package can start below that and reprice after the fixed or promotional period ends.

Weigh the one-way nature of the decision against the length of your likely holding period. A household expecting to sell within the lock-in has a different answer from one intending to hold the flat for 20 years. Our HDB loan and bank loan comparison sets the two options side by side on rate, cash and flexibility.

Checks before you exercise the option

Settle these four before the option fee is at risk:

1. Ask the bank for the longest tenure that still holds the 75% ceiling given your income-weighted average age, then price the monthly instalment at that tenure.
2. Get the assessed instalment at the 4% floor and confirm it clears MSR at 30% of gross monthly income, before adding other debts for TDSR.
3. Confirm the bank’s valuation and hold cash for any gap above it.
4. Check the lock-in end date and the legal subsidy clawback period against the earliest date you might sell or refinance.

A 75% loan and a 30-year tenure are not available together on a flat. Decide which of the two your cash position needs, get the IPA on that basis, and only then negotiate the price.

Sources: MAS, loan tenure and loan-to-value limits, MAS, MSR and TDSR rules, MAS, reply on the 4% medium-term interest rate floor, HDB, housing loan interest rate, HDB, resale purchase of an HDB flat, IRAS, Buyer’s Stamp Duty.