How to Finance Your First Home in Singapore: A Complete Guide

Buying your first home is a major financial milestone. In Singapore, whether you're purchasing a BTO flat, resale HDB, or private condo, understanding how to finance your property is just as important as choosing the right unit.

This comprehensive guide walks you through the main financing methods available in Singapore, from CPF usage and bank loans to housing grants and budgeting tips.

1. Determine Your Budget

Start by assessing how much you can afford.

Key factors to consider:

Monthly income and expenses
Available savings
CPF Ordinary Account (OA) balance
Loan eligibility and monthly repayment capacity

Use HDB’s or a bank’s affordability calculator to estimate your budget realistically before viewing properties.

2. Understand Down Payment Requirements

For HDB Flats:

HDB Loan: 10% down payment (can be paid entirely with CPF)
Bank Loan: 20% down payment (minimum 5% cash, 15% CPF or cash)

For Private Property:

25% down payment (5% cash minimum, 20% CPF/cash)
Additional 5%–15% if you already own property (due to LTV limits)

3. Choose Between HDB Loan vs Bank Loan

Criteria	HDB Loan	Bank Loan
Interest Rate	2.6% fixed	~3.0% (variable/fixed)
Down Payment	10% (CPF allowed)	20–25% (5% cash minimum)
Loan Tenure	Up to 25 years	Up to 30 years
Flexibility	More lenient	Stricter credit checks

Choose based on your long-term plans, income stability, and willingness to manage rate changes.

4. Use of CPF for Property Purchase

Your CPF OA funds can be used for:

Down payment (except the mandatory 5% cash)
Legal and stamp duty fees
Monthly home loan repayments

Ensure you leave enough in your OA for other purposes (like insurance or emergencies). Also, remember that accrued interest must be refunded if you sell the home later.

5. Understand the Loan Eligibility Criteria

For HDB Loan:

Must be a Singapore Citizen
Household income limit: $14,000 for families (as of 2025)
No private property ownership in the past 30 months

For Bank Loan:

Based on Total Debt Servicing Ratio (TDSR): total debt <55% of gross monthly income
Credit score and existing liabilities affect loan amount
Requires Approval in Principle (AIP) before house-hunting

6. Apply for Housing Grants (HDB Buyers)

Eligible first-time buyers can receive substantial housing grants:

Enhanced CPF Housing Grant (EHG): Up to $80,000
Family Grant: Up to $50,000 for resale flat buyers
Proximity Grant: Up to $30,000 (if living near parents)

Grants reduce your loan size and monthly repayments. Amounts depend on income, age, and location.

7. Budget for Additional Costs

Besides the down payment and loan, plan for:

Buyer’s Stamp Duty (BSD): 1–6% depending on price
Legal fees: ~$2,500–$3,500
Agent fees (if engaging one)
Renovation costs
Furniture and appliances
Home insurance

Always keep an emergency fund to cover unexpected costs during the homebuying journey.

8. Monthly Mortgage Planning

A good rule of thumb is to keep monthly mortgage payments within 30–35% of your monthly income.

Use the Mortgage Servicing Ratio (MSR) cap for HDB properties:

Max 30% of monthly gross income

Factor in interest fluctuations if you’re taking a floating-rate loan.

9. Secure an Approval in Principle (AIP)

Before you start shopping for homes, apply for an AIP from a bank.

It tells you how much you can borrow
Valid for 30–90 days
Makes you a more credible buyer to sellers and agents

For HDB buyers, you’ll need a HDB Loan Eligibility (HLE) letter instead.

10. Financial Tips for First-Time Homebuyers

Avoid maxing out your loan just because you’re eligible
Keep monthly repayments affordable to maintain lifestyle flexibility
Refinance your loan after 2–3 years if rates improve
Save for renovations before committing to resale units
Don’t forget ongoing costs: property tax, condo fees, maintenance

Being financially prepared makes home ownership less stressful and more enjoyable.

Conclusion

Financing your first home in Singapore doesn’t need to be overwhelming. By understanding your options—from CPF usage and housing grants to bank vs HDB loans—you can plan your purchase with confidence and clarity. Always assess your budget honestly, think long term, and speak with a mortgage advisor or agent when in doubt.

A financially sound property purchase sets you on a path toward stability, growth, and peace of mind.